London Session Wrap-up
- Spanish unemployed rises by 87K vs. 31.3K expected
- UK services PMI rises to 62.5 vs. 59.8 estimate
- European Commission lowers euro zone growth and employment forecasts
The pound dominated the early London session after the UK’s services PMI report exceeded expectations. GBP/USD jumped to 1.6050 while GBP/JPY blasted above 157.50. The comdolls also joined the rally as traders reacted to the possibility that the PBOC is back to stimulating bank liquidity.
Only the euro missed on out the bulls’ party after the European Commission released its latest forecasts. Not only did EC downgrade its growth estimates for 2013 and 2014, but it also predicted further weaknesses in the employment sector.
The US ISM non-manufacturing report at 4:00 pm GMT is next on the economic calendar. Analysts are expecting weaker numbers compared to last month, so a downside surprise could lead to USD losses as it could also hint at weak NFP numbers.
Asian Session Wrap-up
- RBA thinks AUD is “uncomfortably high”
- China’s services PMI at 52.6 in Oct. vs. 52.4 in Sept.
- PBOC’s 7-day repo rate at 4.1% vs. 4.3% last week
The comdolls and the yen crosses got busy during the Asian session as traders reacted to the RBA statement and equities price action. The Aussie in particular took hits across the board when the RBA said that the below-trend growth would likely continue and that the current AUD levels are “uncomfortably high.”
The yen received a boost against its counterparts as Nikkei’s rocky price movements inspired risk aversion and JPY buying. EUR/JPY, USD/JPY, and AUD/JPY have retraced from its intraday lows, but right now short-term candlesticks are pointing to a continuation of JPY strength.
At 9:00 am GMT we’ll see Spain’s unemployment change, followed by Switzerland’s inflation numbers at 9:15 am GMT. Investors will probably pay more attention to the U.K.’s services PMI at 10:30 am GMT though, since a reading above the expected 60.4 figure could support the upside surprise from yesterday’s construction PMI report.
U.S. Session Wrap-up
- U.S. factory orders shows 0.1% growth in August, 1.7% uptick in September
- FOMC’s Powell and Eric Rosengren believe policy should be “accommodative for some time”
- U.K. BRC retail sales monitor at 0.8% in October vs. 0.7% in September
The dollar bears slowly furthered their cause in the U.S. session as they dragged the Greenback lower against most of its counterparts. It didn’t help the Greenback that FOMC members such as Jerome Powell and Eric Rosengren supported additional stimulus in their speeches. EUR/USD found support at the 1.3500 handle, USD/JPY tested 98.50, and GBP/USD popped back to its intraday highs after revisiting 1.5950.
At 4:30 am GMT we’re expecting the RBA statement where the central bank is expected to keep its rates at 2.50%. We’re also looking for a bit more optimism from the RBA on the back of better-than-expected Australian reports but a bit of jawboning wouldn’t come as a surprise. BOJ Governor Kuroda also has a speech scheduled in Osaka at 6:30 am GMT but not many are expecting to see market-moving news.
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