UK Manufacturing PMI Rose; ISM Manufacturing Next

Fiscal cliff measure approved but negotiations in February to be even more difficult; UK manufacturing PMI improved; German and Eurozone manufacturing PMI revised lower. Focus turns to ISM manufacturing.

Risk trades pushed higher after both the House of Representatives and the Senate approved the bipartisan fiscal cliff measure. The bill now only needs to be signed by the president. EURUSD nearly touched 1.33 but later lost a part of its gains. JPY pairs surged higher during Asia and still trade near session highs.

The fiscal cliff can was merely kicked down the road. The negotiations that are coming in two months time are likely to be even more difficult and have the potential to be even more disruptive as the debt limit will need to be raised at the same time.

UK manufacturing PMI bested expectations as it rose in December to a 15 month high at 51.4 after seven months of sub 50 readings. Production and new orders expanded at accelerated rates, employment decline was negligible and both input and output inflation hit multi-month highs. Nevertheless, GBP ignored the release and continued to trade around 1.63 against USD and 0.8125 against EUR.

German December manufacturing PMI was revised lower to 46.0 from initial estimates of 46.3. German CPI is still being collected and the preliminary result for December is due later during the session. Eurozone final manufacturing PMI for December was revised lower to 46.1 from 46.3.

The US data calendar is limited to ISM manufacturing at 10:00 am ET that is expected to rise in December to 50.2 after falling to 49.5 in November.   

Patrik Urban