Daily Market Pulse

Over the weekend, US politicians in Washington D.C. came to an agreement to avoid a government shutdown through November 17th. Of note in this agreement is a lack of funding for Ukraine for the ongoing war with Russia. Markets initially reacted in a positive-risk tone, sending USD lower, equity futures higher, and US treasury yields lower. In addition, the Chinese manufacturing PMI returned to expansion for the first time in 6 months, sending USD/CNH lower and further pushing all markets into the positive-risk direction. 

This sentiment didn’t last long, with markets reversing as US bond yields continued their post-FOMC move higher. The US 10-year Treasury yield is the highest it has been since 2007, and this continues to weigh on risk appetite, with the USD stronger against most currencies. EUR/USD has moved to the lower end of the 1.0500 handle as mixed Eurozone PMI data continues to cast doubt on the ECB being able to maintain a hawkish interest rate policy. USD/CHF on the other hand, is handling USD strength the best, marginally higher on the day, as Swiss manufacturing PMI data surprised to the upside. 

USD/CAD has resumed its move higher to the mid 1.3600 handle even as oil prices remain strong above $90/barrel. Canadian manufacturing PMI came in lower than expected. 

GBP/USD is drifting lower in line with other USD pairs even with positive UK housing and PMI data. 

USD/MXN is higher on the day ahead of the PMI and central bank economist survey releases at 11 a.m. EST today.  

USD/BRL continues its move higher after passing above its 200-day moving average last week. There will be numerous votes within the Brazilian Senate today towards reducing the longer-term budget deficit in 2024. 

USD/JPY is higher on the day as the Bank of Japan announced increased sovereign bond-buying, adding to JPY weakness from last week, when they also surprised the market with unscheduled bond purchases. 

Fed Chair Powell is due to speak later today at a roundtable discussion alongside Philly Fed president Harker. The market will be paying close attention to this conversation given the last time he spoke was at the previous FOMC rate decision which has been the chief culprit of the risk-off move in markets of late.