Daily Forex Fundamentals – November 4, 2013

London Session Wrap-up

  • UK construction PMI at 59.4 vs. 58.9
  • Euro zone Sentix investor confidence improved from 6.1 to 9.3
  • Italian manufacturing PMI weaker than expected at 50.7

Better than expected UK construction PMI allowed the pound to bounce off its current lows against the Greenback, as GBP/USD recovered above 1.5950 a few minutes after the release. EUR/USD also managed to retreat from its recent selloff despite the weaker than expected Italian manufacturing PMI, as euro traders focused on the strong improvement in the region’s Sentix investor confidence index.

In the next few hours, the U.S. will print its factory orders data for September and August, which could post a 1.9% increase and a 0.2% uptick respectively. FOMC member Powell is set to make his testimony at 5:40 pm GMT while FOMC member Rosengren will give his speech at 10:00 pm GMT. Any remarks on the Fed taper could have a strong effect on USD pairs during and after the actual event.

Asian Session Wrap-up

  • Fed official Fisher blames U.S. government for fiscal drag
  • Spanish manufacturing PMI as expected at 50.9
  • UK construction PMI to hold steady?

Yen pairs were mostly stuck in consolidation for most of the Tokyo trading session, thanks to the bank holiday in Japan. Meanwhile, the Australian dollar was able to push for more gains against its counterparts, lifted by the improvement in Chinese non-manufacturing PMI and stronger than expected earnings among large Australian firms.

The U.S. dollar paused from its recent rallies after Fed official Richard Fisher gave a speech on the negative impact of the U.S. government’s fiscal policies on overall economic performance.

In the euro zone, Spain’s manufacturing PMI came in line with consensus at 50.9, higher than the previous 50.9 reading, allowing the euro to stay above 1.3500 for now. The U.K. is set to print its latest construction PMI figure in a few minutes and analysts are expecting it to stay at 58.9. A downside surprise could trigger a break below consolidation for GBP/USD or GBP/JPY though.

Friday US Session Wrap-up

  • US ISM manufacturing PMI stronger than expected at 56.4 vs. 55.3
  • Australian retail sales post 0.8% uptick
  • Japanese banks on holiday

On Friday’s U.S. session, the Greenback was able to draw support from the strong ISM manufacturing PMI report, pushing USD/JPY back above 98.50 and USD/CHF past the .9100 handle. The actual figure improved from 56.2 to 56.4 in October instead of dipping to 55.3, reflecting stronger industry expansion for the month.

Over the weekend, China printed an improvement in its October non-manufacturing PMI from 55.4 to 56.3. Earlier today, Australia printed a better than expected retail sales figure of 0.8% versus the estimated 0.5% uptick for October while the previous month’s reading was revised higher from 0.4% to 0.5%. These upbeat figures could provide support for AUD/USD and AUD/JPY throughout the Asian trading session.

Up ahead, we have manufacturing PMI figures due from Spain and Italy, as well as the overall euro zone region. Small improvements are expected but disappointments could lead to a deeper selloff for euro pairs during the upcoming London session. Also due around 10:00 am GMT is the October U.K. construction PMI, which is expected to stay at 58.9. Stronger than expected data could lead to a bounce for GBP/USD or GBP/JPY.

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  • Destinified

    Thanks for the information, it was very insightful

  • tom

    Always looking for direction when everything else seems so,ah directionless. Thnx Forest !