Australian Dollar (AUD) Supported by Risk-On Trade
The Australian Dollar (AUD) firmed through Tuesday’s session, finding support amid a risk-on mood in markets. Also buoying the ‘Aussie’ on New Year’s Eve was the publication of China’s latest manufacturing PMI, where another expansion in factory growth was cheered by AUD investors.
However the Australian Dollar could face some headwinds today as economists forecast Australia’s latest manufacturing PMI will show factory growth continued to contract in December.
Pound (GBP) Firms on Wage Rise Announcement
The Pound (GBP) trended higher on New Year’s Eve thanks to the announcement that UK workers on minimum wage are set to receive a notable bump in wages in 2020. Prime Minister Boris Johnson announced the national living wage will rise by 6.2% in April, a jump of more than four times the rate of inflation, buoying Sterling on hopes it will help to bolster consumer spending and economic growth in 2020.
Looking ahead, the Pound may struggle to maintain its upward momentum this morning as the final release of the UK’s manufacturing PMI is set to confirm factory growth slumped to a seven-year low in December.
Euro (EUR) Steady as Investors Look to 2020
The Euro (EUR) closed out last year on a steady footing, mostly on the hopes that 2020 will prove more promising for the single currency. Analysts forecast that the Euro is going into 2020 with a slight bullish bias, with receding global trade headwinds expected to improve Eurozone growth in the coming year.
In the short-term however the Euro may face some hiccups later today, as the Eurozone’s own PMI figures are expected to report another slump in factory growth in December.
US Dollar (USD) Slumps as Markets Remain Risk-On
The US Dollar (USD) was left to trade at a five-month low on Tuesday as the USD selling bias remained firmly in place. Investors continued to shun the ‘Greenback’ on New Year’s Eve as the risk-on mood and some year-end shortening of USD positions by investors weighed on the currency.
Coming up in the second half of the week we have the publication of the ISM manufacturing PMI, which could see the US Dollar kick off 2020 on a sour note if it shows the US factory sector remained in the doldrums last month.
Canadian Dollar (CAD) Muted as Oil Prices Dip
The Canadian Dollar (CAD) was left mostly directionless on Tuesday, with the commodity-correlated ‘Loonie’ struggling to find support as WTI crude prices fell back below $62 a barrel.
CAD investors will be looking to the Bank of Canada’s (BoC) Carolyn Wilkins for fresh impetus in the latter half of the week, with the Canadian Dollar potentially facing some more headwinds if Wilkins breaches the topic of a potential rate cut from the bank in 2020.
New Zealand Dollar (NZD) Struggled in Quiet Trade
The New Zealand Dollar (NZD) fluctuated in the run up to the New Year on Tuesday, with the ‘Kiwi’ falling victim to the thin-trading conditions in spite of the risk-on mood in markets.
Data Releases
January 2nd 08:00 AUD Manufacturing PMI (Dec) 49.4
January 2nd 19:00 EUR Manufacturing PMI (Dec) 45.9
January 2nd 19:30 GBP Manufacturing PMI (Dec) 47.6