Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Dollar weakness persisted amid central bank decisions
US Treasury markets showed strong performance in the belly of the curve as positioning unwound, with broader market impacts seen across FX and equities.
The USD weakened broadly, with notable moves against JPY in Asia and selling pressure vs NOK, AUD, SEK and NZD for G10.
European markets faced pressure from German political uncertainty, while both Riksbank and BOE delivered expected rate cuts.
US equities maintained strength with SPX reaching 5973 and Nasdaq Composite touching 19269, supported by positive seasonal factors.
Euro-sterling driven by UK jobs data
Since these indices function similarly to the PMIs, anything below 50 denotes a contraction.
The September survey’s permanent placements indicator stayed lackluster at about the 45-mark.
The demand-less-supply indicator worsened as staff demand fell to a six-month low, which was a greater decline than staff availability. Additionally, the salaries index dropped, reaching its lowest level since early 2021 at 52.8.
Nearer longer-term range support at 0.8202-0.8301 represents a possible short- and medium-term bullish trend reversal for EUR/GBP.
Bulls must tactically maintain the break over next resistance of 50-day moving average 0.8378 in order to hold onto the ball. Near 200-day moving average of 0.8470 is the next material zone of resistance.
Yuan outlook hinges on China inflation data
China CPI will be reported tomorrow on a Saturday. In October, we anticipate CPI inflation to continue at 0.4% year over year, which is unchanged from September.
Food prices are expected to decline sequentially, while core prices may remain stable.
Due primarily to a strong sequential run, we anticipate that PPI deflation will decrease from -2.8% in September to -2.4% y-o-y in October. This is because prices for a wide variety of metal raw materials have increased, and October saw an increase in the price of crude oil globally.
The USD/CNY near term support now sits at 50 day moving average of 7.1100 and next near term resistance at 7.1579.
USD selling was apparent into FOMC
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 4 – 9 November
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
