Mid-Day Report

Euro Boosted by Stellar PMIs, Canadian Dollar Pressured after Poor Retail Sales

Typography

Euro strengthens broadly today as supported by solid PMI data that indicates strong Q4 growth. Nonetheless, the common currency remains in negative territory against all major currency except Dollar and Loonie, Canadian Dollar suffers some selling after much softer than expected retail sales data. Overall, trading is relatively quiet today as US is on holiday. Subdued trading could carry on for the rest of the week.

Eurozone PMI: Q4 to round off best year for a decade

PMI data out of Eurozone are generally positive. Eurozone PMI manufacturing rose to 60.0 in November, up from 58.5, above expectation of 58.2. Eurozone PMI services rose to 56.2, up from 55.0, above expectation of 55.2. Germany PMI manufacturing rose to 62.5, up from 60.6 and above expectation of 60.3. Germany PMI services rose slightly to 54.9, up from 54.7, missed expectation of 55.0. France PMI manufacturing rose to 57.5, up from 56.1, beat expectation of 55.9. France PMI services rose to 60.2, up from 57.3 and beat expectation of 57.0.

Markit noted that "growth kicked higher in November to put the region on course for its best quarter since the start of 2011." And, "the PMI is so far running at a level signalling a 0.8% increase in GDP in the final quarter of 2017, which would round-off the best year for a decade."

Also released from Europe, German GDP was finalized at 0.8% qoq in Q3. UK GDP was unrevised at 0.4% qoq in Q3. Total business investment rose 0.2% qoq. Index of services rose 0.4% 3mo3m. CBI reported sales jumped sharply to 26 in November.

ECB accounts showed "broad agreement" on asset purchase cut

The accounts of ECB October meeting showed that there was "broad agreement" among policymakers to cut the asset purchase program next year. The account added that "the envisaged purchase horizon served to underline the Governing Council's commitment to its price stability objective and also entailed a prolonged market presence in view of possible future shocks." 

Meanwhile, there were concerns that "the open-ended nature of the asset purchase program might generate expectations of further extensions as the intended end date of the program approached." And the idea was put forth for a "clear end date" to the program. But the general consensus was to "keep the flexibility to extend the programme further if necessary."

Elsewhere

Canada retail sales rose 0.1% mom in September, well below expectation of 1.0% mom. Ex-auto sales rose 0.3% mom, below expectation of 1.1% mom. New Zealand retail sales rose 0.2% qoq in Q3, core retail sales rose 0.5% qoq, both below expectation. Eurozone PMI will be a main feature in European session.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
21:45 NZD Retail Sales Q/Q Q3 0.20% 0.40% 2.00% 1.80%
21:45 NZD Retail Sales Core Q/Q Q3 0.50% 0.90% 2.10% 1.90%
07:00 EUR German GDP Q/Q Q3 F 0.80% 0.80% 0.80%
08:00 EUR France Manufacturing PMI Nov P 57.5 55.9 56.1
08:00 EUR France Services PMI Nov P 60.2 57 57.3
08:30 EUR Germany Manufacturing PMI Nov P 62.5 60.3 60.6
08:30 EUR Germany Services PMI Nov P 54.9 55 54.7
09:00 EUR Eurozone Manufacturing PMI Nov P 60 58.2 58.5
09:00 EUR Eurozone Services PMI Nov P 56.2 55.2 55
09:30 GBP GDP Q/Q Q3 P 0.40% 0.40% 0.40%
09:30 GBP Total Business Investment Q/Q Q3 P 0.20% 0.30% 0.50%
09:30 GBP Index of Services 3M/3M Sep 0.40% 0.40% 0.40% 0.50%
11:00 GBP CBI Reported Sales Nov 26 5 -36
12:30 EUR ECB Monetary Policy Meeting Accounts
13:30 CAD Retail Sales M/M Sep 0.10% 1.00% -0.30% -0.10%
13:30 CAD Retail Sales Ex Auto M/M Sep 0.30% 1.10% -0.70% -0.40%