Economic Data Points to Global Weakness – PaxForex

Europe started today’s sour economic news releases as the Service Sector PMI came in much weaker across the continent. The Eurozone Service PMI came in at 51.6 which missed estimates which called for an increase to 51.9. The Eurozone Composite PMI also missed estimates and was reported at 52.9. The UK followed suit and reported its Service PMI at 58.3, missing estimates for a gain to 59.0 from 58.8.

Retail sales in the Eurozone also came in much weaker than expected as retail sales contracted 1.6% in December (MoM) while November was revised down to show a gain of 0.9%. Expectations called for a contraction of 0.7%. Retails sales (YoY) delivered an even bigger disappointment as they showed a contraction of 1.0% as economists expected an increase of 1.5%. November’s gain was revised down to 1.3%.

Negative sentiment carried over to the US where the ADP report this morning missed economists’ predictions for a gain of 185,000 new jobs in the private sector. The actual figure was 10,000 lower at 175,000. December’s gain was revised down by 8,000 to 227,000. This may hint at downward revisions for December’s non-farm payroll data.

The sole bright spot was the US Non-Manufacturing Index which came in at 54.0 for the month of January which marks a solid improvement over December’s 53.0. The service sector accounts for roughly two-thirds of all economic activity which makes it more important as an gauge than manufacturing reports.

The US Dollar has been in a narrow range as economic data comes in mixed which does not allow for any direction to be maintained. Most forex traders will limit their transactions this week until Friday when the US will release its NFP report for the month of January which may disappoint once again while December risks a downward revision from an already weak 74,000.

Written by PaxForex