Market Movers of the Day
Asia-Pacific
*New Zealand Wages rose 0.4% in the third quarter, more than market estimations
Europe
*German PMI Manufacturing in October at 51.0 as expected
*Euro-zone PMI Manufacturing in October at 50.7 meeting market expectations
*UK PMI Manufacturing in October better than expected at 53.7
Americas
*US Pending Home Sales rose 6.1% in September
*US ISM Manufacturing climbed to 55.7 in October beating all market forecasts
The Overall Sentiment
Equities
US stock markets advanced boosted by better-than-expected manufacturing and housing figures. The ISM Index climbed to its highest level in three years showing encouraging signs of improvement in the manufacturing sector. US equities gave up some gains as financial stocks declined on comments from a Fed official about the banking system being ‘far from robust’ but managed to close on the positive side with the S&P gaining 0.7% and the Dow Jones adding 0.8%. The UK manufacturing sector surprisingly expanded as well adding to the positive sentiment and the FTSE 100 closed up 1.2% driven by gains from mining companies. In Japan a negative reaction caused by worse-than-expected earnings reports sent the Japanese Nikkei 225 down 2.3%, its biggest decline in a month.
Forex
An inconsistent day for the Dollar started with weakness against the Euro as the positive European manufacturing figures triggered appetite for riskier currencies. The rally reversed however when the associate director of the Fed’s bank-regulating division stated that the current situation of the banking system is ‘far from being robust’ spurring investors’ demand for the Dollar’s safe-haven properties. Nevertheless, sentiment inverted once again as strong US manufacturing and housing figures shifted attention to higher-yielding assets sending the EUR/USD to the 1.48 area in late trading hours. The Canadian dollar advanced the most in a gaining session for commodity-linked currencies with a 0.7% appreciation against the greenback. The Aussie dollar traded around 0.9080 ahead of the RBA rate decision. The Pound had a choppy session versus its US counterpart and declined against most majors as the uncertainty grows around this week’s BoE rate decision. The Yen weakened for a second day versus most currencies as risk appetite makes a comeback fuelled by renewed beliefs that global economy is improving.
Commodities
Gold made a strong advance of around $20 reaching $1064 an ounce and rapidly approaching its highest level of $1070.80. Silver climbed above $16.60 but still has much territory to cover to return to last month’s highs on the $18 area. Crude Oil had a volatile session following the intraday swings of the equity markets and closed up about a dollar to trade slightly above $78.
The Day Ahead
The day will start with the highly expected RBA rate decision. Australia’s central bank is likely to raise its benchmark interest rate by a quarter percentage point to 3.5% from 3.25% amid strengthening national economy, although some analysts forecast a half-point increase based on concerns about medium term inflation pressures. In the UK positive figures are expected for the PMI Construction report and the US Factory Orders will complete a day with a thin stream of economic data being released ahead of a loaded calendar for the rest of the week.
Technical Analysis
EUR/GBP DAILY
EUR/GBP has been following a downward channel for the last three weeks. After the last bearish wave the cross stalled at the lower boundary of the channel and started to change direction once again presenting the opportunity to enter a Long position to take advantage of a new bullish impulsion.
Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
