Following Monday’s heavy sell off, the pound managed to claw some of these losses after UK construction output rose to a six and a half year high in January.
The data from Markit revealed that construction firms hired more people in January, the eighth month running, and all subsectors of construction – house building, commercial property construction and civil engineering – all saw rising activity.
Overall whilst the pound showed gains, these gains were limited ahead of the Bank of England’s quarterly inflation report next Wednesday, where investors will look to gauge what kind of guidance the Bank will give with regards to a hike in interest rates.
Data from the Eurozone was fairly mixed yesterday. Spanish unemployment rose again, despite the government insisting that the economy was improving. The number of unemployed people rose by 113,097 in January, far more than expected.
The Eurozone producer price index, although falling by 0.8%, actually came in better than expected. The producer price index measures the changes in prices by domestic producers of commodities.
As a result of the mixed data, movements on the Euro were fairly flat.
Only one notable bit of information from the US yesterday, with US factory orders falling by 1.5% in December. However the fall wasn’t quite as bad as markets had anticipating, with the fall largely attributed to a drop in transportation order. In fact, if this is taken out of the equation then factory orders were up by 0.2%.
Data this morning from the Eurozone has been mixed, causing minimal movements on the euro.
The service sectors in the Spain, France and Germany all expanded beyond expectations for January. However in the Eurozone as a whole, whilst there was as expansion, the expansion was not as much as markets were expecting.
Service sector detail are due from the UK this morning as well as Eurozone retail sales. ADP employment figures may disappoint this afternoon from the US, which could weaken the US dollar and the day rounds off with service sector figures from the US.
9.28am – GBP – Markit Services PMI (Jan): Expected to expand to 59.
10.00am – EUR – Retail Sales (Dec): Expected to fall by 0.5%.
13.15pm – USD – ADP Employment Change (Jan): Expected to have dropped to 180,000 jobs added.
13.58pm – USD Markit Services PMI (Jan): Expected to expand to 53.7.