A notably weaker than expected US ISM manufacturing release reinforced growth fears.

A notably weaker than expected US ISM manufacturing release reinforced growth fears and offset a strong headline ADP employment number.

US 10-year yields declined to 11-month lows and the dollar overall lost ground with increased speculation over a Fed funds rate cut undermining sentiment.

Wall Street indices also declined sharply as technology stocks were sold, although sentiment improved on Friday with equities and risk assets recovering some ground while the yen retreated.
Gold advanced to a fresh 6-month high with silver also making net gains.

There was choppy trading in crude with net gains as global risk appetite improved.

The UK PMI construction index declined to a 3-month low of 52.8 for December from 53.4 previously and marginally below consensus forecasts. There was, however, an improvement in business confidence to 8-month highs amid optimism over infrastructure projects. Markets remained wary over the overall economic outlook given political uncertainty.

Global risk conditions had an important impact during the day with Sterling gaining some support as markets stabilised and risk assets recovered some stability. German Chancellor Merkel and Irish Prime Minister Varadkar reiterated that the Brexit withdrawal deal would not be changed, although they also pledged to offer reassurances and guarantees where possible.

GBP/EUR was unable to get back above 1.1100 having fallen to the 1.10990 area intraday while GBP/USD moved back above 1.2600 and the UK currency edged stronger on Friday as risk conditions improved slightly.

Economic Calendar

07:00GBP Nationwide House Prices (Y/Y)(DEC, 2018)1.50%1.90%
07:00GBP Nationwide House Prices (M/M)(DEC, 2018)0.10%0.30%
08:50Markit Serv PMI(DEC, 2018)49.649.6
08:55EUR German PMI Composite(DEC, 2018)52.252.2
08:55EUR German PMI Services(DEC, 2018)52.552.5
08:55German Unemployment Change(M/M)(DEC, 2018)-11K-16K
08:55German Unemployment Rate(M/M)(DEC, 2018)5.00%5.00%
09:00Euro-Zone PMI Composite(DEC, 2018)51.351.3
09:00Euro-Zone PMI Services(DEC, 2018)51.451.4
09:30GBP PMI Services(DEC, 2018)50.850.4
10:00Euro-Zone CPI (Y/Y)(DEC, 2018)1.90%1.90%
10:00Euro-Zone Core CPI (Y/Y)(NOV 08, 2018)1.00%1.00%
13:30USD Average Hourly Earnings (M/M)(DEC, 2018)0.30%0.20%
13:30USD Private Nonfarm Payrolls (DEC, 2018)175K161K
13:30USD Non-farm Payrolls(M/M)(DEC, 2018)175K155K
13:30USD Labor Force Participation Rate(DEC, 2018)-62.9
13:30United States Unemployment Rate(M/M)(DEC, 2018)3.70%3.70%
13:30CAD Employment Change (M/M)(DEC, 2018)5.5K94.1K
13:30CAD Full Employment Change(DEC, 2018)-89.9K
13:30CAD RMPI (M/M)(NOV, 2018)--2.40%
13:30CAD Unemployment Rate (M/M)(DEC, 2018)5.70%5.60%
14:45USD Markit PMI Composite(DEC, 2018)54.754.7
14:45USD Markit Services PMI(DEC, 2018)53.453.4
15:15USD FOMC Member Powell Speech--
15:15FOMC Member Raphael Bostic speech--
16:00USD Crude Oil Inventories-2.333M-0.046M
18:00USD Baker Hughes US Oil Count-885

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.