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November 6, 2021

Forex Market Recap (31-05 November 2021)

Bart Kurek

The big move of the week was the drop in GBP as markets were surprised by the BoE holding off on policy changes. Sterling dropped right after the news and could find a way to recover before the weekend. The big winner was the Japanese yen, again the usual beneficiary in risk-off environments which was likely the lean this week due to inflation and supply chain concerns.

USD:

  • ISM Manufacturing PMI in October 60.8 vs 61.1 in September
  • US Treasury plans to borrow $1.015T in Q4, more than the August estimate of $703B
  • FOMC statement: Fed will reduce bond purchasing program by $10B Treasury and $5B in mortgage-backed securities
  • FOMC says that inflation will last “well into next year”
  • Markit Services PMI in October 58.7 vs 54.9 in September
  • ADP National Employment Report: Private Sector Employment Increased by 571,000 Jobs in October
  • Biden says the economy is recovering faster than expected
  • NFP in October 531k vs 455k expected

EUR:

  • Eurozone factory growth hurt by supply woes, price pressures in October
  • French Manufacturing PMI fell to 53.6 in October, down from 55.0 in September
  • Germany Manufacturing PMI fell to 57.8 in October, down from 58.4 in September
  • Lagarde says ECB is "very unlikely" to hike rates next year
  • ECB’s Vasle sees growing risk that inflation will stay elevated
  • German factory orders up 1.3% vs 1.7% forecast, -8.8% previous
  • German industrial production unexpectedly drops by 1.1% in September
  • Euro area retail sales down by -0.3%

GBP:

  • Manufacturing PMI in October 57.8 vs 57.1 in September
  • Services PMI in October 59.1 vs 55.4 in September
  • Bank of England defies markets, keeps rates on hold at 0.10%; two members voted for an immediate raise to 0.15%
  • House prices rose for a fourth month running in October, climbing above an average of £270K
  • Bank of England should be cautious about raising rates
  • BOE Governor Bailey says jobs market will provide missing clues to rate hike timing

CAD:

  • Manufacturing PMI in October 57.7 vs 57.0 in September
  • Building permits rose 4.3% to $10.1B in September
  • Employment in Oct.: +31,200 vs 50,000 forecast; unemployment rate ticked lower to 6.7% from 6.8%

JPY:

  • Manufacturing PMI in October: 53.2 vs 51.5 in September
  • Japanese finance and economy ministers meet and reaffirm the commitment to 2% inflation target
  • BoJ Kuroda says they're in "no rush to exit stimulus even if Fed tapers"

AUD:

  • Job advertisement series rose 6.2% in October, recovering the losses of the previous three months during the COVID-19 restrictions
  • Manufacturing PMI for October 50.4 vs. 51.8 previous
  • RBA held its cash rate at 0.10% as expected
  • RBA drops projection for no rate rise until 2024, but remains patient with expectations for hike in 2023
  • Services PMI for October 51.8 vs 45.5 in September
  • Retail sales rose 1.3% as expected
  • Services PMI improves from 45.7 to 47.6

NZD:

  • RBNZ considering debt servicing restrictions and interest rate floors to fight housing-related financial stability risks
  • Jobless rate drops to record low of 3.4%, participation and hourly wages up in Q3 2021
  • Commodity prices up by 2.1% after previous 1.5% gain

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