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Daily Brief

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Focusing on ISM Manufacturing Index

USD

The US market will focus on ISM Manufacturing Index for October. The number is expected to improve to 54.0% from 52.5% last month. After closing up over 100 points yesterday, DOW Futures are looking at a higher opening later this morning of around 60 points. Traders will be watching President Trump’s comments on China’s request to remove tariffs as part of the Phase 1 trade agreement.

EUR

EUR/USD trading lower as markets expect trade talks to continue towards a successful conclusion. New ECB President Christine Lagarde delivered her first speech on Monday but did not address fiscal or monetary policy. There are concerns that Lagarde may end up disagreeing with German members of the ECB over monetary policy.

GBP

The British election is weighing on the pound. According to opinion polls, while the Tories seem to have the lead, they do not seem to have an absolute majority. It seems the market may prefer the certainty of PM Johnson’s Brexit deal over the possible uncertainty of having Jeremy Corbyn as PM.

JPY

Bank of Japan Governor Kuroda stated that the new forward guidance indicates “downward bias on policy rates”. He also stated that monetary policy easing measures are not limited to rate cuts. He remains optimistic as far as Japan’s economy is concerned and he expects moderate expansion to continue.

CAD

Analysts are expecting Canada’s merchandise trade deficit to narrow to C$600m from C$960 million in September. As the commodity markets move higher, the Canadian Dollar will continue to improve.

CNY

Speaking of the trade talks, Chinese President XI Jinping continued his pledge to open China’s market. He claimed that China will continue to honor their commitments and deliver what they promised. China continues to push for more tariff reliefs as the Phase 1 trade deal gets closer to signing. He has requested that the US eliminate the tariffs that are scheduled for December 15, which would include $156B in Chinese imports including electronic goods and toys.

USD: ISM manufacturing index due today.

USD: ISM manufacturing index due today.

EUR: ECB President Lagarde disappoints in first speech.

EUR: ECB President Lagarde disappoints in first speech.

GBP: British election weighing on the pound.

GBP: British election weighing on the pound.

JPY: BOJ continues downward bias on policy rates.

JPY: BOJ continues downward bias on policy rates.

CAD: Trade deficit to narrow in September.

CAD: Trade deficit to narrow in September.

CNY: Trade talks continue as China hopes for tariff relief.

CNY: Trade talks continue as China hopes for tariff relief.

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