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After getting whupped earlier, the Greenback regained its footing and was the top-performing currency of the morning London session.

And apparently, the euro and the pound were the biggest victims of the Greenback’s recovery, although both European currencies were also likely dragged down by Brexit-related concerns.

  • Swiss retail sales y/y: 0.8% vs. -0.7% expected, -2.7% previous
  • Spanish manufacturing PMI: 52.6 vs. 51.5 expected, 51.8 previous
  • Swiss manufacturing PMI: 57.7 vs. 56.5 expected, 57.4 previous
  • Italian manufacturing PMI: 48.6 vs. 48.9 expected, 49.2 previous
  • French final manufacturing PMI: 50.8 vs. no change from 50.7 expected=
  • German final manufacturing PMI: 51.8 vs. no change from 51.6 expected
  • Euro Zone final manufacturing PMI: 51.8 vs. no change from 51.5 expected
  • U.K. manufacturing PMI: 53.1 vs. 51.6 expected, 51.1 previous

Major Events/Reports:

U.K.’s manufacturing PMI

It’s a brand new month, which means another batch of U.K. PMI reports from Markit.

And first to be released today was the U.K.’s manufacturing PMI report for the October period. And it was better-than-expected since the report revealed that the PMI reading jumped from 51.1 to a two-mon53.1, a much better reading compared to the consensus that it would only improve slightly to 51.6.

Commentary from Markit had generally a downbeat vibe, though.

Markit noted, for instance, that “while the manufacturing PMI reading “rose to 53.1, up from October’s 27-month low of 51.1 … the performance of the sector remained comparatively lacklustre, with the latest PMI reading still among the weakest registered over the past two-and-a-half years.”

And while the domestic market remained relatively robust, “new export business dropped for the second straight month in November, the first back-to-back contractions since early-2016.”

And as usual, survey respondents blamed “reduced client interest from overseas and ongoing Brexit uncertainties as the main factors underlying the latest decline in foreign demand.”

But on a more upbeat note, “November saw a mild rebound in the level of UK manufacturing employment, with staffing levels rising following a decline in October.”

In addition, “Inflation of input costs and selling prices accelerated in November, remaining above their respective survey averages in both cases.”

Risk-friendly start in Europe (but faltering)

Europe is starting the new week with an intense bout of risk-taking since all of the major European equity indices were very well in the green.

There were signs of returning risk aversion, though, since almost all of the major European equity indices were off their highs for the day after encountering sellers about halfway through the session.

Market analysts attributed the intense risk-taking to risk sentiment spillover since they were still pointing to the trade war truce between the U.S. and China.

As for the later signs of risk aversion, there’s still no apparent reason for that.

  • The pan-European FTSEurofirst 300 was up by 1.27% to 1,427.57 but off the day’s high at 1,438.99
  • Germany’s DAX was up by 2.20% to 11,505.03 but off the day’s high at 11,568.31
  • The blue-chip Euro Stoxx 50 was up by 1.46% to 3,219.55 but off the day’s high at 3,245.45

Major Market Mover(s):

USD

The Greenback found buyers from the get-go and was the top-performing currency of the morning London session.

Aside from short-covering ahead of the Fed speakers for later, there was no apparent catalyst for the Greenback’s recovery, however.

Well, risk sentiment did show signs of deteriorating later on, but as mentioned earlier, the Greeback staged  a broad-based recovery from the get-go.

Fed Vice Chair Clarida also said some relatively positive things about the U.S. economy during a Bloomberg interview, but Clarida’s interview was aired near the end of the session and after the Greenback already bust the moves.

USD/JPY was up by 11 pips (+0.10%) to 113.57, USD/CHF was up by 20 pips (+0.21%) to 0.9987, USD/CAD was up by 15 pips (+0.11%) to 1.3191

GBP & EUR

Both the euro and the pound got hit by selling pressure right when the morning London rolled around. And between the two, it was the pound that got the brunt of it. Heck, not even the U.K.’s better-than-expected PMI reading was able to stop the pound’s slide.

Anyhow, there were no direct catalysts for the selling pressure on both currencies. They both weakened when the Greenback strengthened, though. Also, some market analysts were pointing to Brexit-related jitters ahead of next week’s Parliamentary vote on Theresa May’s Brexit deal.

GBP/USD was down by 99 pips (-0.78%) to 1.2718, GBP/JPY was down by 101 pips (-0.70%) to 144.42, GBP/CHF was down by 72 pips (-0.57%) to 1.2703

EUR/USD was down by 35 pips (-0.31%) to 1.1333, EUR/JPY was down by 29 pips (-0.23%) to 128.70, EUR/CHF was down by 12 pips (-0.11%) to 1.1319

Watch Out For:

  • 1:00 pm GMT: U.S. Fed Governor Randal Quarles is scheduled to deliver a speech
  • 2:00 pm GMT: U.K. government expected to release “full reasoned position” paper
  • 2:15 pm GMT: New York Fed President John Williams will give a speech
  • 2:30 pm GMT: Markit’s Canadian manufacturing PMI (53.9 previous)
  • 2:45 pm GMT: Markit’s U.S. final manufacturing PMI (no change from 55.4 expected)
  • 3:00 pm GMT: ISM’s U.S. manufacturing PMI (58.0 expected vs. 57.7 previous)
  • 3:00 pm GMT: U.S. construction spending (0.4% expected vs. 0.0% previous)
  • 3:30 pm GMT: U.S. Fed Governor Lael Brainard will be speaking
  • 5:30 pm GMT: BOE MPC Member and Chief Economist Andy Haldane will give a speech