U.S. ISM Non-Manufacturing for November rose 2.4 points to 57.2, beating the market consensus of 55.4 and achieving a 13-month high. While the survey likely benefited from the post-election relief that's showed up in just about every other survey of market conditions, the word "election" did not show up in the ISM's press release, with respondent comments instead focusing on real activity and orders. Only two industries (real estate and public administration) reported contraction, while 14 indicated growth.
The business activity index rose to 61.7, beating its whole range of forecasts. Employment index went up 5.1 to 58.2, 13-month high. Inventories grew more sluggishly, that index down 0.5 to 52.0, while fewer businesses indicated that inventories are excessive, that index down 1.5 to 60.5, second-lowest of the past 18 months. Price growth was still uncomfortably fast, that index at 56.3, down only 0.3 from last month's 26-month high.
Despite much-better-than-expected data from the U.S. the EUR/USD bounced from a near 21-month low set the previous day after Italian Prime Minister Matteo Renzi's loss in a referendum over constitutional reform, an outcome that had been widely expected.
The focus now turns to the European Central Bank's policy meeting on Thursday . The ECB is expected to extend its QE programme by six months and keep the size of monthly asset purchases unchanged. The decision to keep buying assets at the pace of EUR 80bn per month would be mainly intended to preserve the current substantial degree of monetary accommodation, at a time of limited progress towards a sustained adjustment in the path of inflation consistent with the Governing Council’s inflation aim. Any other policy option, be it tapering or a one-step reduction in the monthly purchases, would inevitably lead to tighter financial conditions and strengthen the EUR against the USD. Because of this risk bearish bets against the EUR would be unjustified now.
We opened EUR/USD at 1.0650 yesterday for 1.0840, but we are considering an extension towards 1.0950.
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The business activity index rose to 61.7, beating its whole range of forecasts. Employment index went up 5.1 to 58.2, 13-month high. Inventories grew more sluggishly, that index down 0.5 to 52.0, while fewer businesses indicated that inventories are excessive, that index down 1.5 to 60.5, second-lowest of the past 18 months. Price growth was still uncomfortably fast, that index at 56.3, down only 0.3 from last month's 26-month high.
Despite much-better-than-expected data from the U.S. the EUR/USD bounced from a near 21-month low set the previous day after Italian Prime Minister Matteo Renzi's loss in a referendum over constitutional reform, an outcome that had been widely expected.
The focus now turns to the European Central Bank's policy meeting on Thursday . The ECB is expected to extend its QE programme by six months and keep the size of monthly asset purchases unchanged. The decision to keep buying assets at the pace of EUR 80bn per month would be mainly intended to preserve the current substantial degree of monetary accommodation, at a time of limited progress towards a sustained adjustment in the path of inflation consistent with the Governing Council’s inflation aim. Any other policy option, be it tapering or a one-step reduction in the monthly purchases, would inevitably lead to tighter financial conditions and strengthen the EUR against the USD. Because of this risk bearish bets against the EUR would be unjustified now.
We opened EUR/USD at 1.0650 yesterday for 1.0840, but we are considering an extension towards 1.0950.
GrowthAces.com - Daily Forex Trading Strategies