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Europe Roundup: Sterling steadies below 1.3000 on upbeat UK manufacturing PMI, greenback near 2-week trough ahead of U.S. nonfarm payroll report, European shares surge - Friday, November 1st, 2019

Market Roundup

  • Oil rises on Chinese factory data
     
  • UK will not appoint new BoE chief before December 12 election
     
  • UK manufacturing decline slows after new Brexit stockpiling rush - PMI
     
  • Gold prices decline on profit-booking
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. Labor Department releases nonfarm payrolls report for the month of October. The report is likely to show 89,000 jobs were added compared with an increase of 136,000 in September.
     
  • (0830 ET/1230 GMT) The U.S. Bureau of Labor Statistics will release labor force participation rate for the month of October. The rate stood at 63.2 percent in the previous month.
     
  • (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that the unemployment rate rose to 3 percent in October from 2.9 percent in September.
     
  • (0830 ET/1230 GMT) The United States' average hourly earnings are likely to rise 0.3 percent in October after staying unchanged in the month before.
     
  • (0930 ET/1330 GMT) The Markit will release Canada's Manufacturing PMI for the Month of October. The indicator stood at 51 in the prior month.
     
  • (0945 ET/1345 GMT) Financial firm Markit releases U.S. Manufacturing PMI for the month of October. The index is likely to show a final reading of 51.5 after posting similar gains in the previous month.
     
  • (1000 ET/1400 GMT) The Institute for Supply Management (ISM) is expected to report that U.S. manufacturing Purchasing Managers' Index rose to 48.9 in October from 47.8 in September.
     
  • (1000 ET/1400 GMT) The Commerce Department is likely to report that U.S. construction spending increased 0.2 percent in October after rising 0.1 percent in the previous month.
     
  • (1300 ET/1700 GMT) Baker Hughes reports U.S. Oil Rig Count. 
     

Key Events Ahead

  • (1200 ET/1600 GMT) Federal Reserve Bank of New York John C. Williams' speech
     
  • (1300 ET/1700 GMT) Vice-Chairman of the Board of Governors of the Federal Reserve System Richard H. Clarida gives a speech
     
  • (1300 ET/1700 GMT) Vice-Chair for supervision of the Federal Reserve Board of Governors Randal Keith Quarles' speech
     
  • (1430 ET/1830 GMT) Federal Reserve Bank of New York John C. Williams' speech
     

FX Beat

DXY: The dollar index tumbled to an 11-day trough as investors expect the U.S. economy created 89,000 new jobs in October, fewer than the 136,000 created in September. The greenback against a basket of currencies traded flat at 97.27, having touched a low of 97.16 earlier, its lowest since October 21.

EUR/USD: The euro consolidates near a 10-day high hit in the previous session, as Christine Lagarde began her presidency of the European Central Bank. The European currency traded flat at 1.1147, having touched a high of 1.1131 on Thursday, its highest since October 21. Immediate resistance is located at 1.1179, a break above targets 1.1200. On the downside, support is seen at 1.1127 (5-DMA), a break below could drag it below 1.1106..

USD/JPY: The dollar tumbled to a 3-week low as a U.S. interest rate cut and renewed concern about U.S.-China trade talks underpinned safe-haven assets. The major was trading flat at 108.02, having hit a low of 107.88 earlier, its lowest since October 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. nonfarm payrolls, unemployment benefit claims and manufacturing PMI from both Markit and ISM. Immediate resistance is located at 108.22, a break above targets 108.47. On the downside, support is seen at 107.62, a break below could take it near at 107.31.

GBP/USD: Sterling rallied, extending gains for the fifth straight session after data showed UK's Purchasing Managers’ Index rose to 49.6 from 48.3 in September, its highest level since April. The major traded 0.1 percent lower at 1.2953, having hit a high of 1.2975 the day before, it’s highest since October 22. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3000, a break above could take it near 1.3068. On the downside, support is seen at 1.2876 (5-DMA), a break below targets 1.2841. Against the euro, the pound was trading flat at 86.11 pence, having hit a low of 86.76 last week, it’s lowest since Oct. 17.

USD/CHF: The Swiss franc retreated from a 10-day peak as investor risk sentiment revived on data that showed China’s factory activity expanded at the fastest pace in over two years in October. The major trades flat at 0.9866, having touched a low of 0.9854 earlier, it’s lowest since October 22. On the higher side, near-term resistance is around 0.9891 and any break above will take the pair to the next level till 0.9916. The near-term support is around 0.9843, and any close below that level will drag it till 0.9800.

Equities Recap

European shares rallied and were on track for their best day in more than a week, as an unexpected bounce in China’s manufacturing activity overshadowed conflicting tones surrounding a possible U.S.-China trade deal.

The pan-European STOXX 600 index surged 0.4 percent at 398.15 points, while the FTSEurofirst 300 rallied 0.4 percent to 1,561.82 points.

Britain's FTSE 100 trades 0.3 percent up at 7,272.17 points, while mid-cap FTSE 250 gained 0.2 to 20,068.40 points.

Germany's DAX rose 0.4 percent at 12,912.40 points; France's CAC 40 trades 0.4 percent lower at 5,751.16 points.

Commodities Recap

Crude oil prices steadied after tumbling to a 1-week low in the previous session on a combination of rising global supply and uncertain future demand. International benchmark Brent crude was trading 0.5 percent up at $59.72 per barrel by 1052 GMT, having hit a low of $59.19 the day before, its lowest since October 23. U.S. West Texas Intermediate was trading 0.4 percent higher at $56.18 a barrel, after falling as low as $53.70 on Thursday, its highest since October 23.

Gold prices declined as investors booked profit after strong Chinese factory data eased fears of an economic slowdown, but the uncertainty surrounding a U.S.-China trade deal boosted safe-haven appeal. Spot gold eased 0.2 percent to $1,510.16 per ounce at 1055 GMT, having hit a high of $1,514.66 earlier, its highest since Oct. 25 but is set to rise 0.5 percent on a weekly basis, after a 1 percent gain the previous week. U.S. gold futures were down 0.1 percent at $1,513.10 per ounce.

Treasuries Recap

The U.S. Treasuries fell during the afternoon session, ahead of the country’s labour market report for the month of October, scheduled to be released today by 12:30GMT and the ISM manufacturing PMI for the similar period, also due for release today by 14:00GMT. In addition, FOMC members Williams, Clarida, Quarles and Williams will deliver their respective speeches through the day, adding direction to the debt market. The yield on the benchmark 10-year Treasury yield rose 1 basis point to 1.700 percent, the super-long 30-year bond yield surged 1-1/2 basis points to 2.190 percent and the yield on the short-term 2-year too traded 1-1/2 basis points higher at 1.540 percent.

The United Kingdom’s gilts narrowly slipped during European trading hours Friday after the country’s manufacturing PMI for the month of October cheered market expectations, edging tad closer to the 50-point benchmark, which separates expansion from contraction. The yield on the benchmark 10-year gilts, edged 1 basis point up to 0.639 percent, the 30-year yield also rose 1 basis point to 1.147 percent and the yield on the short-term 2-year remained flat at 0.510 percent.

The German bunds remained flat during European session Friday amid a muted trading session that witnessed data of little economic significance. The German 10-year bond yield, which move inversely to its price, hovered around -0.404 percent, the yield on 30-year note traded steady at 0.087 percent and the yield on short-term 2-year remained tad down at -0.667 percent.

By Lactus Fernandes
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