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The euro and the dollar fought it out during today’s morning London session. But in the end, there can be only one. And that happened to be the euro.

The pound, meanwhile, encountered selling pressure and erased most of its gains from the earlier Asian session, even though there were no apparent catalysts.

  • French flash manufacturing PMI: 56.7 vs. 56.2 expected, 56.1 previous
  • French flash services PMI: 57.4 vs. 57.0 expected, 57.0 previous
  • German flash manufacturing PMI: 60.5 vs. 60.0 expected, 60.6 previous
  • German flash services PMI: 55.2 vs. 55.6 expected, 55.6 previous
  • Euro Zone flash manufacturing PMI: 58.6 vs. 57.7 expected, 58.1 previous
  • Euro Zone flash services PMI: 54.9 vs. 55.8 expected, 55.8 previous

Major Events/Reports

Mixed Euro Zone PMI reports

Earlier today, Markit released the latest batch of PMI reports for Germany, France, and the Euro Zone as a whole.

And according to the latest PMI report for the Euro Zone as a whole, the Euro Zone’s flash manufacturing PMI climbed from 58.1 to 58.6 in October, which is an 80-month high, beating expectations that it would deteriorate to 57.7.

Unfortunately, the Euro Zone’s flash services PMI missed expectations by falling to a two-month low of 54.9 instead of holding steady at 55.8.

According to commentary from Markit, “The strong performance of manufacturing partly reflected higher new export orders, with export growth picking up from that seen in September.”

And while the headline reading for services PMI fell because of weaker business activity, commentary from Markit pointed out that “Service providers took on extra staff to the greatest extent in seven months.”

Meanwhile, “manufacturing jobs growth was the strongest since data collection began in June 1997.”

And given the strong jobs growth in both the services and manufacturing sector during the October period, “the rate of job creation was the strongest in over a decade.”

More importantly for ECB taper expectations, commentary from Markit noted that (emphasis mine):

“Inflationary pressures continued to build at the start of the fourth quarter. Companies posted the fastest rise in input costs in six months, with both the manufacturing and service sectors seeing sharper rates of inflation in October.”

Further improvements in demand meant that firms were often able to pass rising cost burdens on to their clients. As a result, output price inflation accelerated for the third month running and was the sharpest since June 2011. As was the case with input prices, charges increased at sharper rates across both monitored sectors.”

Donald Tusk speaks on Brexit

European Council President Donald Tusk gave a speech earlier during the session, and he spoke mostly about Brexit.

He first said that Brexit is the “toughest stress test” on the E.U. project.

Tusk then called upon the other E.U. members, saying that:

“We must keep our unity regardless of the direction of the talks.”

He then warned the other E.U. members that:

“If we fail it then the [Brexit] negotiations will end in our defeat.”

After that, Tusk addressed the U.K. by saying that:

“It is in fact up to London how this will end: with a good deal, no deal or no Brexit. But in each of these scenarios we will protect our common interest only by being together.”

Risk-taking in Europe

Appetite for risk was the dominant sentiment in Europe during today’s morning London session, given that the major European equity indices had a weak start but most were already in the green while those that were still in the red by the end of the session were already off their lows.

And the appetite for risk in Europe, according to market analysts, was driven mainly by positive Q3 earnings reports for European companies.

The early skittishness, meanwhile, was attributed by those same analysts to expectations that the ECB may announce the removal of some accommodation from its monetary policy during this Thursday’s ECB statement.

  • The pan-European FTSEurofirst 300 was still down by 0.01% to 1,535.86 but off the day’s low at 1,533.69.
  • Germany’s DAX was up by 0.22% to 13,031.50
  • The blue-chip Euro Stoxx 50 was up by 0.26% to 3,619.50

The risk-on vibes also pushed U.S. equity futures into the green.

  • S&P 500 futures were up by 0.13% to 2,566.75
  • Nasdaq futures were up by 0.11% to 6,071.38

The risk-friendly environment also apparently dampened safe-haven demand for precious metals since they were leaking red.

  • Gold was down by 0.19% tp $1,278.42 per troy ounce
  • Silver was down by 0.21% to $17.039 per troy ounce

Major Market Mover(s):


The euro was able to edge out the resurgent Greenback to emerge as the one currency to rule them all. In fact, the euro is currently poised to be the top-performing currency of the day.

And the euro’s strength was apparently thanks to the latest batch of PMI reports. Sure, the PMI readings were mixed, but market analysts say they were enough to sustain expectations that the ECB may announce a taper to its QE program on Thursday.

EUR/CHF was up by 22 pips (+0.19%) to 1.1615, EUR/JPY was up by 39 pips (+0.30%) to 133.90, EUR/NZD was up by 45 pips (+0.27%) to 1.7005


After sliding against many of its peers during the earlier Asian session, the Greenback regained its mojo and staged a broad-based recovery during today’s morning London session, even though there were no apparent catalysts.

USD/CHF was up by 19 pips (+0.20%) to 0.9879, USD/CAD was up by 17 pips (+0.14%) to 1.2651, USD/JPY was up by 34 pips (+0.30%) to 113.89


The pound encountered selling pressure when the morning London session rolled around. And selling pressure didn’t really let during the course of the session, so much so that the pound ended up as the worst-performing currency of the morning London session and erased its gains from the earlier session to boot.

And the weird thing about the pound’s weakness was that there wasn’t really any direct catalysts. European Council president Donald Tusk did mention Brexit, but the pound was already on its way down before Tusk even got hold of the mic.

Anyhow, some market analysts say that the pound’s slide was probably due to weaker rate hike expectations after BOE Cunliffe’s comments yesterday, as well as profit-taking ahead of tomorrow’s U.K. GDP report, and a reality check on the state of Brexit negotiations after last Friday’s euphoria brought about by conciliatory rhetoric.

GBP/USD was down by 47 pips (-0.36%) to 1.3162, GBP/CAD was down by 59 pips (-0.35%) to 1.6653, GBP/CHF was down by 21 pips (-0.16%) to 1.3003

Watch Out For:

  • 1:00 pm GMT: CB’s Chinese leading index (1.1% previous)
  • 1:45 pm GMT: Markit’s flash U.S. manufacturing PMI (53.0 expected, 53.1 previous)
  • 1:45 pm GMT: Markit’s flash U.S. services PMI (55.2 expected, 55.3 previous)
  • 2:00 pm GMT: Richmond Fed’s manufacturing index (17 expected, 19 previous)