There were no major UK developments during Monday, but markets did fret over the risk that the UK would also have to impose restrictions to curb coronavirus infections. The UK currency was unable to make headway against the dollar and dipped to test lower levels following the nomination of Powell for a second term as Fed Chair. Overall risk conditions were slightly less confident late in Europe as equities also edged lower. The latest UK business confidence data will be watched closely on Tuesday with expectations that the PMI readings will weaken on the month. The Bank of England will be monitoring employment, costs and pricing indices closely within the data.
Key Data
10.30 Markit Manufacturing PMI (Nov) Exp. 57.3 Prev. 57.8
10.30 Markit Services PMI (Nov) Exp. 58.5 Prev. 59.1
The Euro attempted to recover some ground in early Europe on Monday but was unable to make significant headway as underlying sentiment remained negative. There were further concerns surrounding coronavirus developments with unease over the latest imposition of restrictions and fears that further measures would need to be introduced over the next few weeks. In this environment, there were worries that the economic recovery would be compromised. The German Bundesbank stated that inflation was likely to be just below 6% for November and the economic recovery could take a breather. ECB council member Kazaks stated that the bank can look through transitory price pressures, but would need to act if supply shocks put upward pressure on wages. Euro-zone consumer confidence dipped to -6.8 for November from -4.8 previously and below market expectations of -5.5.
Key Data
8.30 German Markit Manufacturing PMI (Nov) Exp. 56.9 Prev. 57.8
8.30 German Markit PMI Composite (Nov) Exp. 51 Prev. 52
10.00 Markit PMI Composite (Nov) Exp. 53.2 Prev. 54.2
Just after the New York open, President Biden announced that he would nominate Federal Reserve Chair Powell for a second term with Brainard as Vice-Chair. Although the decision was in line with expectations, there had been significant speculation that Brainard would be nominated as Chair. Overall, there was speculation that monetary policy would be slightly more restrictive under Powell than Brainard and the dollar posted net gains after the decision, especially with speculation that underlying inflation concerns will force a faster pace of tightening. The Chicago Fed national activity index strengthened to 0.76 for October from a revised -0.18 previously with strong employment data and a rebound in industrial production. Existing home sales edged higher to an annual rate of 6.34mn from 6.29mn previously.
Key Data
15.45 Markit Services PMI (Nov) Exp. 59.1 Prev. 58.7
N/A Joe Biden Speech