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The series of improving data from the United Kingdom and election and Brexit related news are buoying the British pound in sessions. This week, four consecutive reports on the UK’s economic activities fueled the pound sterling and paved the way for bears to pull the EURGBP pair lower this first week of December. First, the UK Manufacturing PMI came in at 48.9% from 48.3%, surprisingly beating 48.3% projections. Then, the UK November Construction PMI rose to 45.3% from 44.2% prior, exceeding expectations of 44.5% growth. Earlier today, two more reports further reinforced the British pound’s strength, the UK Composite and Services PMI. The recent poll from Britain showing better odds for Boris Johnson and the Conservatives to snatch the majority seat in the UK elections also helps push the pair even further down in sessions. The implied probability of the Conservative party hiked 70% from 65% according to the survey.
After a steep drop in the last days of November, the EURCHF pair is on its way to recovery and continue its upward climb to resistance. However, many uncertainties cloud over the pair as the safe-haven asset could be easily triggered by trade tensions between the United States and China. If the US President continues to give out comments that would heighten the tension between the two economic giants, the euro will have a tough time against the franc. But in the meantime, the pair is expected to gain traction ahead of December 15 when Trump will supposedly impose new sanctions to more Chinese goods by 15%. The lackluster figures from the Swiss CPI report, of course, wasn’t enough to prevent EUR bulls from seeking to retrieve some of its losses before the month started. The Swiss Federal Statistical Office showed that Switzerland’s Consumer Price Index (Month-over-Month) met projections of -0.1%, a limited improvement from -0.2% prior.
Despite contracting in today’s trading, the AUDUSD trading pair is still expected to push upward in coming sessions due to trade war woes as the year closes to an end. In all fairness, both currencies are currently weighed by the unfavorable results of their economic activities. The AUD’s weakness today came after Australia’s retail sales report for October contracted from 0.2% to 0.0% on a Month-over-Month basis. Also, the country’s trade balance for October plunged from 7.180 billion to just 4.520 billion, diving even deeper from projections of 6.100 billion. Meanwhile, in the United States, the ISM Non-Manufacturing Purchasing Managers’ Index went down from 54.7% to 53.9%, coming in below expectations of 54.5%. And lastly, the US ADP Nonfarm Employment Change for November declined from 121,000 to just 67,000, contrary to projections of 140,000 growth prior.
With the central bank of Canada behind it, the loonie is on track to reel in the pair closer to its support, especially now that the Australian dollar is showing signs of weakness following the upsetting data. The Canadian dollar rallied after the Bank of Canada gave a surprisingly hawkish signal yesterday, November 4. The markets were surprised by the assessment of the central bank on the domestic and global economic prospects. According to the central bank, it sees budding evidence of stabilization in the world economy. Traders were caught off guard because they were anticipating a reiteration of downbeat rhetoric from the bank. Aside from that, the BoC also didn’t adjust its official cash rate, leaving it unchanged at 1.75 in the last month of the year. the country’s robust economy is also cited by the bank, crediting the surprise increase in business investments and housing construction in the previous quarter.