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The British pound had one of its better days in a long time as Brexit minister Raab hinted of a deal being ready by November 21. A bit of risk appetite and month-end profit taking also came into play, yet the Greenback managed to stay in the green.

  • U.S. ADP non-farm employment change up 227K vs. 188K forecast in Oct
  • September U.S. ADP figure downgraded from 230K to 218K
  • Canadian economy grew 0.1% in Sept. vs. projected flat GDP reading
  • Canada’s RMPI fell 0.9% vs. projected 0.5% decline
  • Canada’s IPPI posted 0.1% uptick instead of staying flat
  • U.S. employment cost index up 0.8% in Q3 vs. 0.7% consensus, 0.6% previous
  • Chicago PMI slipped from 60.4 to 58.4 vs. 60.1 forecast
  • BOC Governor Poloz repeated that rates will need to keep rising
  • EIA crude oil inventories up 3.2M barrels vs. 3.6M forecast, 6.3M previous
  • OPEC: October output increased 390K barrels per day
  • Brexit minister Raab in letter: “Expect 21 November to be suitable” in finalizing deal
  • Brexit ministry spokesperson: No set date for EU negotiations to conclude

Major Events/Reports:

Risk-taking carries on

Positive vibes from the earlier trading session continued throughout the U.S. hours, with upbeat earnings data boosting equity indices.

  • Dow 30 index is up 241.12 points to 25,115.76 (+0.97%)
  • S&P 500 index is up 29.11 points to 2,711.74 (+1.09%)
  • Nasdaq is up 144.25 points to 7,305.90 (+2.01%)

Gold chalked up another day in the red as it returned more safe-haven gains from earlier on. However, crude oil was also on the losing end as a Reuters survey revealed that OPEC output jumped by 390K barrels per day despite production constraints in Iran and Venezuela. Crude oil stockpiles rose 3.2 million barrels, slightly slower than the estimated 3.6 million gain and the earlier 6.3 million increase.

Mostly  upbeat U.S. data

Another day, another set of positive U.S. reports. Dollar bulls might be bracing themselves for a strong NFP read as the ADP non-farm employment change beat expectations.

The October report showed jobs growth of 227K, way above the 188K forecast, but the earlier reading was downgraded from 230K to 218K. Gains were broad-based across all industries, led by the hospitality, trade and leisure sectors.

However, analysts pointed out that the numbers signal more benefits for larger employers as they can offer competitive wages and benefits compared to smaller businesses.

Also in labor market news, the employment cost index for Q3 came in better than expected at 0.8% versus the estimated 0.7% increase and the earlier 0.6% gain, reflecting higher wages.

On the flip side, the Chicago PMI turned out weaker than expected as it slid from 60.4 to 58.4 to reflect a slower pace of industry growth versus the consensus of a dip to 60.1. Components revealed that this third consecutive monthly decline was spurred by a lower level of new orders.

Brexit deal ready next month?

Brits got their hopes up that a Brexit deal would be finalized before the end of November as Brexit Minister Raab wrote in his letter to Hilary Benn, Chairman of the U.K. Parliament Brexit Select Committee:

“I would be happy to give evidence to the Committee when a deal is finalized, and currently expect 21 November to be suitable.”

This was underscored by his remarks assuring that “while obstacles remain, it cannot be beyond us to navigate them” and that they have “resolved most of the issues.”

However, his department soon clarified that the November 21 date was merely a suggestion, adding:

“There is no set date for the (EU) negotiations to conclude. The 21st November was the date offered by the Chair of the Select Committee for (Raab) to give evidence.”

Major Market Mover(s):

GBP

Sterling was already in good spirits in the earlier session then got an extra boost from Raab’s hint that a Brexit deal would be ready by November 21. Of course most of these quick gains were returned when U.K. officials clarified that this wasn’t a set date.

Cable spiked to a high of 1.2830 then fell swiftly back to 1.2750; GBP/JPY popped up to 145.13 then retreated to 143.89; EUR/GBP dipped to .8842 then pulled up to .8860, and GBP/CHF retreated from a high of 1.2892.

Watch Out For:

  • 1:30 am GMT: Australian trade balance (1.17B AUD expected, 1.60B AUD previous)
  • 1:30 am GMT: Australia’s import prices q/q (1.1% gain expected, 3.2% previous)
  • 2:45 am GMT: Chinese Caixin manufacturing PMI (dip from 50.0 to 49.9 eyed)
  • 6:30 am GMT: Australian commodity prices y/y (4.8% previous)