The US dollar reversed losses on Monday after the Institute for Supply Management’s PMI report on manufacturing beat estimates.
Not only did the data outperform forecasts of 48.5, but it also rose to 50.9. A reading above the 50-level on the index indicates expansion.
The data for January puts an end to nearly five months of contraction in the sector. ISM prices paid also rose to 53.3, beating estimates of 52.0.
Eurozone Final Manufacturing PMI Stays Flat
The final manufacturing PMI figures for the eurozone saw a meager 0.1 point increase in January. Data from IHS Markit showed that the PMI in the manufacturing sector rose from 47.8 to 47.9.
Despite the small increase, the manufacturing sector remains in contraction.
Regionally, Germany’s manufacturing sector was also weaker, with only the French manufacturing PMI staying afloat the 50-level on the index.
EURUSD Pares Gains from Last Week
The currency pair slipped sharply in the early trading session on Monday. Failing to capitalize on the gains after closing at 1.1095, the common currency gave up the gains easily.
The EURUSD is trading below the 1.1072 level. If resistance forms here, we expect the downside momentum to build up.
Sterling Under Pressure After PM Johnson Hits Back on EU
The pound sterling came under strong selling pressure on Monday, just two days after it formally left the EU. PM Johnson said that he will not accept the EU standards in return for an EU trade deal.
The remarks once again heightened the odds of a no-deal Brexit. Both the EU and the UK have until the end of the year to negotiate on various aspects including trade.
GBPUSD Moves Back into the Range
The currency pair fell after reaching a one-month high into last Friday’s close. Price action is in a steady decline since the start of Monday’s trading session. As a result, GBPUSD is back inside the range of 1.3100 and 1.2960.
There is scope for prices to slip to the lower end of the range in the near term.
Crude Oil Drops Over 2% on Lower Demand
Crude oil prices fell sharply on Monday as price nears the $50.00 level. The declines came as the impact of the Coronavirus outbreak intensifies.
China’s demand for crude oil is forecast to fall by 20%, leading the way to a slump in oil prices. Saudi Arabia is reportedly mulling over the option to cut oil production in response.
WTI Crude Oil Could Stabilize at $50
The steady declines in crude oil prices could halt once it hits the psychological level of $50.00 a barrel. We expect price action to stabilize a bit.
In terms of a correction, the falling trend line will need to be broken to confirm any upside in prices. With the key price level of $51.00, oil prices could face resistance on any rebound.