EUR: Opened early Europe at $1.2960, Euro-dollar closed in NY at $1.2958, just off pullback lows of $1.2956 after rate had been pressured lower through the end month fixings on expected flows. Rate squeezed down to $1.2952 in early Asian trade, as traders probed for stops. Rate recovered to $1.2969 as market positioned for China PMI, the rate coming in at the expected level of 50.2 prompted some paring back of these spec longs that took rate back to retest the earlier lows. However, demand placed into $1.2950 again cushioned with recovery from here, aided by euro-yen demand, was able to lift the rate to a session high of $1.2971. Release of HSBC China PMI showed improvement but fell short of forecasts and prompted another round of selling which took rate to $1.2956 before picking up fresh demand ahead of the European open. Fresh selling emerged into Europe, the break of $1.2950, then $1.2940, seen on reaction to Spain extending its short selling ban, with rate easing to challenge support between $1.2930/00. Asian sovereign buys cushioned, holding a base at $1.2925.
GBP: Opened early Europe at $1.6130 and stg0.8033, GBP closed in NY at $1.6130 after rate had eased off session highs of $1.6139 to $1.6126 into the close. Rate had seen a strong recovery rally through the day, the move up aided by the increase in SNB sterling
holdings in their published reserves. Cable retained buoyancy as euro-sterling was pressured away from earlier highs of stg0.8075 to stg0.8030 as end month euro sales outpaced sterling sales. Cable dipped to $1.6125 in early Asia before attracting stronger demand interest, the rate edging to a session high of $1.6134 before settling in a tighter range around $1.6130 through the main part of the overnight session. Euro-sterling edged back to stg0.8040 in Asia before settling around stg0.8035 into Europe. Stronger than forecast Nationwide house price data provided sterling with an added boost, cable retested $1.6140 before breaking up to $1.6168 where it met a mix of stops and sell interest in the $1.6165/80 area. The cross extended its pullback to stg0.8004 before meeting UK clearer demand ahead of the figure.
JPY: Opened in early Europe at Y80.02 and Y103.69, macro funds lifted dollar-yen to Y79.80 in early Asia, strong demand from Japanese banks gave a further boost to highs of Y80.13 as the pair flushed light stops. Market talk also suggested the move attributed to one asset manager who was seen buying dollars linked to the liquidation of Panasonic and Sharp shares. Profit take sales eased and the rate consolidated above Y80.00 ahead of Europe. Euro-yen lifted on early demand to Y103.60, the cross extended to Y103.89 on dollar-yen’s clean break of Y80.00, later paring gains to settle around Y103.70. Dollar-yen remained in consolidation mode and was tied to a narrow Y79.92-Y80.04 European range with very little action to excite the pair. Stops flushed in euro-dollar added weight to the cross in early Europe, printing lows of Y103.37. Dip demand recovered and extended to Y103.60 where the rate
settled ahead of the NY open.
LOOKING AHEAD:
* US data commences at 1130AM, with the release of US October Challenger Layoffs.
* US jobs related data is due at 1215GMT, with the release of the US October ADP National Employment Report, which has proven historically to be an unreliable indicator in predicting movement in the official report.
* More significant US jobs data follows at 1230GMT, with the release of US Jobless Claims. The level of initial jobless claims is expected to rise by only 1,000 to 370,000 in the October 27 week. With the early-month distortions out of the data, analysts can now put more credence in the weekly claims figures, at least until the start of the holidays.
* Also expected at 1230GMT is US 3Q non-farm productivity, which is expected to rise 2.0% in the third quarter after a 2.2% rise in the second quarter, as output growth remained soft despite the acceleration in GDP. Unit labor costs are expected to rise only 1.1%, slower than the 1.5% first quarter increase.
* Mexico HSBC Manufacturing PMI for the week ending October 12 is also due to be published at 1230GMT.
* German Chancellor Angela Merkel and Irish Prime Minister Enda Kenny are due to conduct a joint press conference at 1230GMT after their meeting in Berlin.
* At 1258GMT, we see the release of US October Markit PMI.
* US October Consumer Confidence is due to be published at 1400GMT, after being delayed due to the disruption caused by Hurricane Sandy. The Conference Board’s index of consumer confidence is expected to rise to 73.0 in October after rebounding to 70.3 in September. Other preliminary confidence indicators already released have suggested sharp improvement
* The main focus of the day will be on the US October ISM Index, also scheduled for release at 1400GMT. The ISM manufacturing index is expected to fall slightly to a reading of 51.4 in October after rebounding above 50 in September. Regional conditions were mixed in October, with the Empire and Richmond areas still experiencing contraction, but the Philadelphia Fed region’s seeing expansion for the first time since April.
* US September Construction Spending also hits the wires at 1400GMT. Construction spending is forecast to rise 0.5% in September after falling in the previous two months. Housing starts surged in the month while completions moved higher, suggesting that residential construction was stronger in the month
* At 1430GMT, we see the release of the US EIA Natural Gas Storage report for the week ending October 26.
* At 1545GMT, BUBA Board member Andreas Dombret is scheduled to give a briefing on Europe’s sovereign debt crisis in New York.
* Mexico IMEF manufacturing index is due at 1700GMT.
* Late US data sees US 22 October Money Supply, due to be released at 2030GMT.
EasyForexNews Research Team