The U.S. dollar is down slightly this morning, making the greenback on track for its second week of losses.
Overview
U.S. stock futures are mixed as some social media companies are trading drastically lower in pre-market trading. However, global equities are mostly in the green today, boosted by Chinese giant Evergrande making a last-minute payment and bringing the company (at least temporarily) back from the brink of default. As a result, risk-sensitive currencies have benefited against the greenback.
U.S. Purchasing Managers Index is the largest risk event on today’s docket and is due out at 9:45 a.m. There are a number of Fed speakers today but Chairman Jerome Powell’s comments on a policy panel at 11 a.m. will steal the headlines. Earnings season continues today as well.
What to Watch Today…
- Purchasing Managers Index at 9:45 a.m.
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GBP ⇓
The British pound is stubbornly unchanged versus the U.S. dollar to start our trading session despite a generally weaker U.S. dollar and solid fundamental data released in the U.K. The Composite Purchasing Managers Index for the month of October unexpectedly jumped in October, suggesting the economy regained momentum after summer Covid restrictions. IHS Markit said its measure of output across the entire economy registered at 56.8, beating estimates of 54.0. A reading above 50 indicates growth.
The data will give hawks at the Bank of England the scope to argue for higher interest rates later this year. It is becoming more likely that the BoE will raise rates next month although some argue the BoE will wait for more labor data and not hike until December. This sort of disagreement is what makes a market so expect some volatility in GBP/USD leading up to the November 4th meeting.
EUR ⇑
The Euro is a touch stronger this morning versus the U.S. dollar despite dour economic data as global supply chain issues wreak havoc on growth. Euro-area businesses are reporting a sharp slowdown in activity but also increasing inflation costs. Private-sector activity in the euro area slowed to the weakest level since April of this year.
Germany, Europe’s largest economy, had the weakest growth in eight months. French manufacturing output experienced its biggest decline since the start of the pandemic last year.
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