- Main drivers: Mixed sentiment with positive USD but indices also higher; China PMIs disappoint, Japan election status quo; Manufacturing PMIs and ISM data later.
- Mixed sentiment: USD rebound from Friday is holding, but also equity markets have started on a decent note. This is coming ahead of a huge week of tier-one events – the FOMC and Nonfarm Payrolls will be key.
- China PMIs fall: Official PMIs fell and missed estimates for both Services and Manufacturing. [Slightly negative for risk appetite]
- Japan lower hour election: the ruling party won a majority again, but with a reduced margin. Essentially maintains the status quo. [JPY neutral]
- PMIs today: Final PMIs for Europe and ISM for the US. Focus on whether growth trends into the Q4 are stabilising and possibly picking up. [FX volatility]
- Central bank speakers: No Fed speakers – FOMC in the “Blackout Period”.
- Economic Data:
- UK final Manufacturing PMI at 0930GMT expected to be unrevised from the flash reading of 57.7
- US ISM Manufacturing at 1400GMT expected to tick slightly lower to 60.4 (from 61.1 in September
- Broad outlook: USD bounced hard on Friday, impacting across forex majors and dragging commodities lower. Indices remain strong.
- Forex: USD recovery threatening to find traction again.
- EUR/USD consolidating after huge volatility since the ECB meeting. A failure around 1.1570/1.1585 resistance would renew downside pressure and a bias towards a test of 1.1525. Above 1.1625 needed to improve once more.
- GBP/USD falling below 1.3710 shows growing downside pressure. Resistance is now at 1.3710/1.3750 to sell into strength. We prefer pressure towards 1.3570/1.3610
- AUD/USD as the uptrend is broken and momentum is turning lower. Reaction to support at 0.7450/0.7475 will be key.
Commodities: recovery trends breaking on precious metals and also on oil.
- Gold impacted lower by USD strength on Friday. This strengthens further the resistance around $1800/$1810. The outlook is increasingly neutral around the olf $1780 pivot.
- Silver drifting lower to break the one-month recovery trend. A drop under $23.75 is also a warning of further unwinding. A close below $23.75 opens $23.00/$23.18 again.
- Brent Crude oil now trading in a range of $82.40/$86.65. Currently around the mid-range pivot at $84.10/$85.10 which is acting as resistance.
Indices: a sharp turn back higher on Wall Street has helped European markets higher again.
- S&P 500 futures into all-time highs again. The breakout at 4548 is now a basis of support.
- DAX looking to break clear of the 15,800 resistance area today. A decisive close above 15,800 opens the all-time highs again around 16,000.
- FTSE 100 big jump higher from 7180 support and the market is testing 7282 resistance again. A close above continues the medium-term bullish breakout targeting 7700.