FX quiet as records hit equities

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FX quiet as records hit equities

NOVEMBER 05, 2019

The U.S. Dollar registered little movement overnight as markets digested the news of the potential signing of a “Phase One” agreement between the U.S. and China that would see many of the recently added tariffs taken away.

Overview

The pact would prevent further escalation of tariffs and guarantee agricultural commitments from China as a buyer.

Additionally, the Chinese officials involved have asked for further support in tech licensing. Familiar ranges are likely to remain in the midst of uncertainty, but stock exchanges globally are enjoying the optimism that has pushed them up to record highs in some cases.

Data-wise, we have a breakdown of Purchasing Managers’ Index Composite and Services at 9:45 AM and Institute of Supply Management’s Non-Manufacturing at 10 AM, which if contractionary could impact the buck in a negative way. Without much other than headline watching, FX markets will likely be rather quiet prior to some central bank action as we asses the Bank of England’s policy decision.

What to Watch Today…

  • PMI Services and Composite 9:45AM
  • ISM Non-Mfg. 10AM

Complete Economic Calendar can be found here.

EUR

The Euro is trading slightly weaker, but again, no major significant changes as we await a data-heavy day tomorrow to dictate if indeed the bloc is overcoming its contractionary path. Germany could technically be in a recession, but it is expected to pull of expansion in items such as Sales and PMIs. Market moves will be slow to come until watchers get a chance to gauge the data and see if Q4 was off to a good start.

JPY

The Japanese Yen has also experienced minor changes but could perhaps look to improve as Governor Haruhiko Kuroda has suggested a move towards a steeper yield curve by selling more super-long-term bonds. The idea would be to see a pick-up in the interest rates, and it could naturally reduce the supply of Yen out there. Japan cannot seem to be able to get rid of its deflation and it has tried to prevent a further loss in economic activity, but its account surplus allows for a safe economy that bond buyers will go to as the globe stresses.

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