November 02, 2018
Pulse of the Market
· U.S manufacturing growth slowed with the ISM index dropping to 57.7 from 59.8
· Bank of England meeting combined with Brexit optimism sent sterling above 1.30
· The Euro experienced strong gains in yesterday’s session because of short covering
· The Canadian Dollar traded higher but its 0.5% gains were modest in comparison
|The U.S Dollar traded lower against all of the major currencies on the first day of November and we can point to a few reasons for the decline. First and foremost, the greenback started the NY session under pressure with the sell-off gaining momentum on the back of softer US data. According to Challenger Grey & Christmas, layoffs surged in October, although more than half of the 153.6% increase was due to Verizon’s voluntary severance program. Manufacturing growth slowed with the ISM index dropping to 57.7 from 59.8, a consequence of the trade war. The dollar was also down because high risk currencies are up and part of this move is driven by the decline in Treasury yields and the corresponding rise in Eurozone, UK and Australian rates. Non-farm payrolls are scheduled for release today and despite yesterday’s decline in the dollar, the market is looking for strong jobs growth. Meanwhile, the big focus yesterday was the Bank of England meeting which combined with Brexit optimism sent sterling above 1.30. Yesterday’s 1.85% rally was the strongest one day gain for the pair this year. The BoE voted 9-0 to leave interest rates unchanged and lowered its growth forecasts for the year but instead of falling, sterling soared as the central bank talked rate hikes. According to the summary of the report, the MPC felt that “Were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate.” Governor Carney said a Brexit deal could release pent up investment demand but a no-deal Brexit could also lead to a major supply shock that could drive up inflation and interest rates. It was also a good day for other currencies such as EUR/USD, which rose 0.9%, AUD/USD which jumped 1.8% and NZD/USD which increased 2%. The Canadian Dollar traded higher but its 0.5% gains were modest in comparison. A stronger than expected Australian trade report helped AUD while NZD was supported by an uptick in job ads and house prices.
|00:30||Australia Retail Sales Ex Inflation (QoQ) (3Q)||Medium||0.4%||1.2%|
|07:00||German Import Price Index (YoY) (SEP)||Low||4.5%||4.8%|
|08:15||Switzerland Retail Sales Real (YoY) (SEP)||Medium||-0.1%||0.4%|
|09:30||Markit/CIPS UK Construction PMI (OCT)||Medium||52||52.1|
|12:30||Canada Unemployment Rate (OCT)||High||5.9%||5.9%|
|12:30||Canada Net Change in Employment (OCT)||High||12.5k||63.3k|
|12:30||U.S Trade Balance (SEP)||Medium||-$53.6b||-$53.2b|
|12:30||U.S Change in Non-farm Payrolls (OCT)||High||193k||134k|
|12:30||U.S Change in Private Payrolls (OCT)||Medium||190k||121k|
|12:30||U.S Unemployment Rate (OCT)||High||3.7%||3.7%|
|12:30||U.S Average Hourly Earnings (YoY) (OCT)||Medium||3.2%||2.8%|
|14:00||U.S Factory Orders (SEP)||Medium||0.5%||2.3%|
|14:00||U.S Durable Goods Orders (SEP F)||Medium||0.8%|
|17:00||U.S Baker Hughes U.S Rig Count (NOV 2)||Medium||1068|
The single currency gained sharply in yesterday’s trading session as Euro zone government bond yields nudged higher following rallying stock markets and upbeat noises on Brexit talks dimmed the appeal of fixed income assets. Across the single-currency bloc, most 10-year debt yields were 1-2 bps higher on the day. Overall, the USD/JPY traded with a low of 1.1306 and a high of 1.1422 before closing the day around 1.1407 in the New York session.
The Japanese Yen traded higher yesterday. Japanese Final Manufacturing PMI improved to 52.9, but missed the forecast of 53.1 points. Japanese 10-year bonds were unchanged. In the U.S, unemployment claims ticked lower to 214 thousand. On the manufacturing front, ISM Manufacturing PMI disappointed, as it fell to 57.7 points. Overall, the USD/JPY traded with a low of 112.58 and a high of 112.98 before closing the day around 112.69 in the U.S session.
The British Pound rose the most in nine months on reports that London is close to sealing a financial services deal with Brussels. A British official said London was close to agreeing on a deal giving UK-based financial services firms basic access to European Union markets. The BoE kept interest rates on hold on Thursday but kept its options open. Overall, the GBP/USD traded with a low of 1.2760 and a high of 1.3033 before closing the day at 1.2997 in the New York session.
The Canadian Dollar gained sharply as the U.S Dollar was broadly lower yesterday. The Canadian dollar declined 1.9 percent in October, its worst monthly performance since February, as optimism after a deal to revamp the NAFTA was overshadowed by a plunge in global stocks. Over the same month, the U.S. dollar climbed 2 percent. Overall, USD/CAD traded with a low of 1.3066 and a high of 1.3166 before closing the day at 1.3083 in the New York session.
The Australian Dollar edged higher yesterday after the country’s trade surplus swelled to a near two-year peak in September helped by a bumper run in resource exports, while the New Zealand dollar was also buoyant. Data from the Australian Bureau of Statistics (ABS) showed the country’s trade surplus climbed to A$3.02 billion when analysts had looked for A$1.7 billion. Overall, AUD/USD traded with a low of 0.7070 and a high of 0.7207 before closing the day at 0.7250 in the New York session.
EUR/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The Relative Strength Index is above 45 and lies below the neutral zone. In general, the pair has gained 0.65%.
Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 53 reading and lies above the neutral zone. On the whole, the pair has gained 1.62%.
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 58 reading and lies above the neutral region. In general, the pair has gained 1.69%.
This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 39 and lies below the neutral region. On the whole, the pair has lost 1.00%.
This cross is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is indicating a bearish tone. The Relative Strength Index is above 60 and lies above the neutral region. In general, the pair has gained 1.18%.
|FOREX Closing Prices for November 01, 2018|
|Daily Pivot Points|
Sources: News, Charts & Quotes (Courtesy: Reuters, US Department Of Treasury)
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