Forex Today: Its PMI day ahead, US tax bill stumble could hurt USD

As usual, the arrival of the new month brings with it a string of manufacturing PMI releases across the globe.

In Asia, Japanese PMI for Nov. showed the manufacturing activity improved at the sharpest rate since March 2014. The detailed showed the demand from overseas underpinned a 44-month high in new business growth. Meanwhile, China Caixin Nov. PMI defied the upbeat official gauge to show the pace of expansion hit a five-month low of 50.8.

In Europe, the focus will be on the UK Nov. manufacturing PMI release. It is expected to rise slightly to 56.5 from the previous month's print of 56.3 but may beat estimates by a wide margin if we take into account the fact that CBI survey reported manufacturing orders at a 30-year high. Also, final PMI readings are scheduled for release across the Eurozone, although the numbers may not have much impact on the common currency unless there is a significant revision to the preliminary estimate.  

Later in the American session, the US ISM PMI will hog the limelight. USD traders would scan the details for signs of continued labor market strength.

Also, traders could stay away from the US dollar, courtesy of the postponement of the Senate tax bill vote.

Major market movers

USD/JPY - It dipped to a low of 112.32 in Asia, before rising to a 10-day high of 112.69. The early losses could be associated with a moderate decline in the S&P 500 futures. The 10-year treasury yield has moved above the critical level of 2.4 percent, thus the spot could remain well bid in Europe.

AUD/USD - The bid tone weakened as China private PMI gauge missed estimates. The overnight drop in gold could have capped gains in Aussie as well. Also, the 10-year Aussie-US yield spread continues to narrow.

EUR/USD - EUR/USD consolidated above 1.19 levels in Asia, defying the widening of the US-German 10-year yield spread. Yesterday's recovery from 1.1809 has left another higher low on the daily chart, suggesting a potential for a break above the weekly high of 1.1961.

GBP/USD - The pair continues to rally on Brexit optimism, although stagnant yield differential puts a question mark on the sustainability of the rally. A better-than-expected UK manufacturing PMI could yield another leg higher in Cable.

Key news

US Senate tax bill stumbles on deficit-focused 'trigger' - Reuters

China's Caixin Manuf PMI remains stable in November

New Zealand: Terms of trade reach new record in Q3

Wall Street closes at record highs as tax bill hopes fuel gains