Services PMI at four-month high
Despite the manufacturing PMI remaining below the 50 threshold denoting expansion and contraction for a second month, coming in at 49.5, the fact that we didn’t fall deeper into contraction territory in January, and actually beat economists’ forecasts, was taken as a positive. The non-manufacturing index performed even better, rising to 54.7, the highest since last September, from 53.8 in December.
The positive slant given to the data helped AUD/USD advance for a second day, treading ever closer to the 200-day moving average at 0.7301. This moving average has capped prices since March 15 last year.
AUD/USD Daily Chart
Kiwi lifted by positive ratings outlook
Earlier this morning, ratings agency S&P announced it was upgrading New Zealand’s ratings outlook to positive from stable, while reaffirming its AA rating. The agency cited forecasts that the local government could reach a budget surplus in the early 2020s as a reason for the upgrade. It also mentioned that the country has monetary and fiscal flexibility, a resilient economy and institutions that are conducive to swift and decisive policy actions as other factors.
NZD/USD was already benefiting from US dollar weakness overnight and the FX pair climbed to an eight week high of 0.6926 after the announcement. The next resistance point could be the December 4 high of 0.6971.
NZD/USD Daily Chart
Slower European growth anticipated
The highlight for today’s European data calendar will doubtless be the release of Euro-zone GDP growth data for the fourth quarter. The latest poll of economists show growth slowing to +1.2% q/q from +1.6% in the third quarter with the prospect of a deeper slowdown into Q1 as the data across the Europe spectrum fails to impress.
More jobs-related data from the US ahead of tomorrow’s nonfarm payroll report are also due. January Challenger job cuts and the Q4 employment cost index for Q4 are the main focus. Speeches come from ECB’s Mersch, Bundesbank president Weidmann and BOC’s Wilkins.
The full data calendar can be viewed at https://www.marketpulse.com/economic-events/ 
GBP/USD – Pares gains after Brexit vote (video)
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.