Daily Report: EUR/USD, GBP/USD, AUD/USD And USD/JPY : December 03 2013

The U.S. Dollar traded mixed, rising against the Yen and the Euro while dropping against the British Pound subsequent to the release of reports on Manufacturing activity. The greenback remained under pressure as investors awaited the release of additional U.S. economic data slated to show whether the economy was strong enough to warrant a reduction in stimulus. According to the Institute of Supply Management, the Manufacturing PMI climbed from 56.4 to 57.3 in the past month, confirming the quickest expansion since spring of 2011. The report mentioned that output and new orders were up by three points, while the jobs segment of the release denoted a slight improvement by posting at 56.5 which was three points higher than October’s reading. Gold prices declined in the early morning hours of the European trading session on Monday. The shiny metal fell for the first time in three days and extended a long string of losses on speculation that this week’s announcements may warrant a cut back in the asset purchases. Futures slipped 5.3 percent in November after the Federal Reserve issued the minutes from the last policy meeting, which confirmed that the FOMC is contemplating scaling back on monetary easing. Analysts believe that gold is set to drop the most in 13 years as many market traders have voiced their disappointment in the metal as an investment. Futures for immediate delivery traded at $1,238.20 a troy ounce in London and contracts for February delivery reached $1,240.20 a troy ounce on the Comex.

In the Euro region, though news confirmed that the Manufacturing PMI expanded, the Euro dipped versus the greenback as the figures pointed to the fact that the Euro-zone’s economic recovery remains slow. The Euro gained versus the Yen as the governor of the Bank of Japan stated that the bank plans to maintain policy accommodative at least until inflation stabilizes at 2 percent. The British Pound rallied versus the U.S. monetary unit and the Euro as the gauge which measures Manufacturing Output in the U.K. showed a fast surge, which was quicker than forecast.

The Yen weakened across the board subsequent to comments by the Bank of Japan’s governor, Haruhiko Kuroda, and as the biggest global economies reported expansion for Manufacturing Production. China announced that the Manufacturing Purchasing Manager’s Index stayed at 51.4 in November, surpassing previous estimates. A similar gauge for the Euro region denoted that Manufacturing expanded at the quickest rate in 24 months. And the U.K.’s Manufacturing PMI rose at the fastest pace since 2011.

Lastly, in the South Pacific, The Australian and New Zealand Dollars advanced following news out of China indicating growth in their Manufacturing sector. The latter rose versus the Aussie after domestic data revealed that export prices climbed to the highest in four decades; and the Aussie gained versus its U.S. counterpart on metrics which confirmed that Building Approvals dropped less than anticipated, while company gains surged. However, demand for the Australian monetary unit remained subdued on the possibility the Reserve Bank may decide to intervene in the market when it meets today.

EUR/USD- Economy Still Sluggish
Despite an economic report showing that Manufacturing activity in the Euro region reached 51.6, which was the highest in two years, the Euro declined against the U.S. Dollar. Economists explained that this shows the Euro-zone’s economy is struggling to recover, especially as the news indicated a cut back in jobs and a slow rise in production. Meanwhile, the Spain announced that Manufacturing slipped to 48.6 in November, sustaining another month of contraction, while France confirmed that the PMI read at 48.6 denoting that it went from expansion to contraction territory in November.

GBP/USD- Pound Rallies And Drops
The British Pound surged upon the release of Manufacturing reports, but retreated from 27-month highs against the greenback as investors grew anxious over the release of macroeconomic fundamentals out of the world’s biggest economy. In the U.K., Monday’s data showed that the Manufacturing Purchasing Manager’s Index climbed to 58.4 in November, marking the biggest jump in close to six years. The release denoted that New Orders surged 64.6 the most in two decades, after posting at 61.3 in October. In addition, Hometrack revealed that British Home prices rallied 0.5 percent, which also helped boost the value of the Pound.

AUD/USD- Aussie Climbs On Chinese Reports
Australia’s Dollar benefitted from positive Manufacturing data issued by China, revealing another expansion in output. According to the HSBC Purchasing Manager’s Index, the production level rose from a preliminary 50.4 to 50.8. Australian releases indicated that Building Approvals fell 1.8 percent, which was much less than the expected 5 percent drop, but remarkably lower than the previously posted 16.9 percent rise in October. Other news confirmed that Corporate Profits went up 3.9 percent in the months of July to September. However, demand for the Australian currency remained low as the Reserve Bank begins its policy meeting today. Some traders have raised speculation that the bank may intervene in the market to debase the Aussie.

USD/JPY- Yen Weakens On Global Data
The Yen depreciated versus its U.S. counterpart as Europe, the U.K. and China issued Manufacturing data which revealed growth, dampening demand for the harbor currency. The Yen stayed to the downside on the likelihood that the Bank of Japan may expand stimulus in order to reach its 2 percent inflation target by 2015.

Today’s Outlook
Today’s economic calendar shows that the Euro region will report on PPI. The U.K. will issue data on Construction PMI. The U.S. will publish the Redbook along with a string of second-tier macroeconomics. Australia will issue GDP. And China will publish HSBC Services PMI.