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Daily Brief

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Possible Brexit extension?

USD

Traders will be focusing on earnings reports from Comcast, American Airlines and Twitter before the bell, with Amazon, Intel and Visa expected after the market closes. Traders will also be focusing on Durable Goods release and Manufacturing and Services PMI. Manufacturing PMI is expected to increase to 51.1 from 50.7 last month, and Services PMI expected to slightly fall to 50.9 from 51.0 last month.

EUR

EUR/USD moved lower during overnight trading after the release of Markit’s Purchasing Managers’ Index for October. French PMI numbers were encouraging, as Manufacturing PMI was at 50.5 and Services PMI was reported at 52.9, both above expectations and reflecting expansion. That news moved the EUR to overnight highs at 1.1160, prior to Germany’s numbers release. Germany’s Manufacturing PMI was at 41.9, just slightly higher than last month’s 41.7, deep in contraction territory. German Services PMI also was disappointing, coming in at 51.2, still expanding but dragging the economy lower. Analysts expect the economy will contract in the third quarter, which would make a recession official. The ECB meets this morning and is expected to leave policies unchanged in Mario Draghi’s last meeting. His press conference later this morning will give him one last opportunity to defend his eight-year tenure, including last month’s stimulus package decision, which included a rate cut and bond-purchasing decision.

GBP

The EU27 is said to be supportive to granting the UK an extension on the UK’s exit from the EU, although a decision is viewed as unlikely until tomorrow. There appear to be two recommendations on the table. European Council President Donald Tusk has recommended a three-month delay, while France has suggested a shorter extension, possibly to November 15. British PM Johnson and Labor Leader Corbyn continue to discuss the timetable for the Brexit bill with no decision made as of yet. GBP/USD was trading quietly this morning.

JPY

Japan also released their October PMI numbers and they were lower as well. Manufacturing fell to 48.5, the lowest number since June 2016. This was down from last month’s 48.9 and missed the expected number of 49.2. This was the sixth consecutive sub-50 release. PMI Services fell to 50.3, down from 52.8. USD/JPY tested resistance at 108.75, before easing back slightly.

CAD

Weaker crude oil prices tend to put pressure on commodity linked currencies such as the Canadian Dollar and that is the situation this morning. Oil prices were lower yesterday, initially affecting the Loonie. An unexpected drop of 1.7 million barrels of inventory from the US did not move the Canadian Dollar higher as many traders had expected.

CNY

US-China trade talks have taken a backseat to other news items despite progress continuing, though there has been no date set for the resumption of face-to-face talks. Most analysts are still hoping for a signing at the APEC meeting next month.

USD: US corporate earnings reports and economic data on the calendar today.

USD: US corporate earnings reports and economic data on the calendar today.

EUR: Poor economic data on last ECB meeting for Mario Draghi.

EUR: Poor economic data on last ECB meeting for Mario Draghi.

GBP: EU said to be supportive of Brexit extension.

GBP: EU said to be supportive of Brexit extension.

JPY: Japan releases lower October PMI numbers.

JPY: Japan releases lower October PMI numbers.

CAD: Lower oil prices putting pressure on the Loonie.

CAD: Lower oil prices putting pressure on the Loonie.

CNY: Progress continues on US-China trade talks.

CNY: Progress continues on US-China trade talks.

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