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Brexit and the BoE Put the GBP in the Spotlight


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Earlier in the Day:

Economic data released through the Asian session this morning included October manufacturing and September trade data out of Australia and China's Caixin manufacturing PMI for October.

For the Aussie Dollar ,

The AIG Manufacturing Index fell from 59.0 to 58.3 in October, with the stats having a muted impact on the Aussie Dollar ahead of the September trade figures and manufacturing numbers out of China, the Aussie Dollar moving from $0.70744 to $0.70745 upon release of the figures.

Australia's trade surplus widened from an upwardly revised A$2.342bn to A$3.017bn in September, coming in well ahead of a forecasted A$1.7bn surplus, according to figures released by the ABS.

  • Goods and service credits increased by A$283m (1%) to A$37,496m, the increase being attributed to:
    • Non-rural goods increased by A$678m (3%).
    • Net exports of goods under merchanting rose by A$1m (6%).
    • Service credits increased by A$96m (1%)
  • Weighing on exports was an A$525m (26%) fall in the export of non-monetary gold.
  • Goods and services debit fell by A$392m (1%) to A$34,479m, the decline being attributed to:
    • The import of capital goods fell by A$607m (9%)
    • The imports of non-monetary gold fell by A$59m (14%)
  • Offsetting the fall in imports were increases in the imports of intermediate and other merchandise goods that increased by A$210m (2%), the import of consumption goods, up A$53m (1%) and service debits that increased by A$11m.

The Aussie Dollar moved from $0.70896 to $0.71099 upon release of the figures that came out ahead of China's manufacturing PMI numbers.

Out of China , the Caixin manufacturing PMI rose from 50.0 to 50.1 in October, coming in ahead of a forecasted 49.9.

  • Production was little changed, after rising in the preceding 27 months, with output schedules largely unchanged due to relatively subdued demand.
  • Total new orders saw a slight expansion, following September's stagnation, while new export business fell for a 7 th consecutive month, though the rate of decline eased.
  • Employment continued to decline, extending the current sequence of job losses to 5-years, while the rate of reduction was the slowest since May.
  • Operating margins were under more pressure, with input costs rising at a quicker pace than factory gate prices, the rate of cost inflation accelerating at the second sharpest pace in 9-months.
  • Optimism fell to an 11-month low amid concerns over subdued market conditions and the effects of the ongoing trade war between the U.S and China.

The Aussie Dollar moved from $0.71119 to $0.71154 upon release of the figures, before easing to $0.7113 at the time of writing, a gain of 0.57% for the session.

Elsewhere, the Japanese Yen was up 0.03% to ¥112.91 against the U.S Dollar, with the Kiwi Dollar rallying 0.57% to $0.6554, supported by the positive numbers out of Australia and pickup in risk appetite in the session.

The Day Ahead:

For the EUR , following a busy start to the week, there are no material stats scheduled for release through the day, leaving the markets to consider what lies ahead for the economy and ECB monetary policy, a pullback in the Dollar through the early part of the day providing the EUR with some respite.

At the time of writing, the EUR was up 0.21% to $1.1336, with geo-political risk the key driver through the day.

For the Pound , economic data scheduled for release through the day includes October house price figures and manufacturing PMI that are released ahead of the BoE's policy decision, release of the inflation report and Governor Carney press conference.

While we will expect some influence form the manufacturing PMI that is forecasted to soften, the latest inflation report and Carney press conference will be of influence following positive news on the Brexit front that provided strong support for the Pound overnight and through this morning.

Any hawkish chatter, supported by optimism of a Brexit deal and the Pound will be on its way back towards $1.30 levels.

At the time of writing, the Pound was up 0.67% to $1.2852.

Across the Pond , stats out of the U.S include the weekly jobless claims figures, 3 rd quarter unit labor costs and nonfarm productivity, which are released ahead of October manufacturing PMI numbers, with unit labor costs and the market's preferred ISM manufacturing PMI likely to be the key drivers through the day, a forecasted jump in labor costs and steady manufacturing numbers a positive for the Dollar.

At the time of writing, the Dollar Spot Index was down 0.25% to 96.886, with today's stats and the Oval Office the key drivers through the day.

For the Loonie , there are no material stats scheduled for release following some disappointing numbers out on Wednesday, with little support coming for the Loonie following the weekly inventory numbers that led to further declines in crude oil prices overnight and through the early part of this morning.

The Loonie was up 0.08% to C$1.3146 against the U.S Dollar at the time of writing.

This article was originally posted on FX Empire

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This article appears in: Investing , Currencies , Oil , Commodities , Gold , US Markets
Referenced Symbols: GLD , UBG , IAU , SGOL



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