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Weekly Forex Wrap Up: 03 November – 07 November 2014

Weekly Forex Wrap Up: 03 November – 07 November 2014

Guest post by John Benjamin at Orbex

ECB leaves policy unchanged but ready to do more. Stands united on QE

The ECB Press Conference formed the main event this week as speculation about dissent within the ECB about Draghi’s style of management started doing rounds. This was however quickly put to rest, reflected by the opening statement of the ECB press conference as well as Draghi’s comments that the ECB’s governing council was unanimous in its decision to increase the balance sheet to the 2012 levels. Draghi however did not mention any particular figures but reiterated that the ECB was standing by for more stimulus should the need arise. While the Euro, single currency remained fairly resilient during the week, declined considerably during the ECB conference closing the day at 1.2374.

  • Eurozone final manufacturing PMI 50.6 vs. 50.7
  • German manufacturing PMI 51.4 vs. 51.8
  • Eurozone PPI m/m 0.2%; PPI y/y -1.4% vs. -1.5%
  • German services PMI 54.4
  • Eurozone services PMI 52.3 vs. 52.4
  • German factory orders 0.8% vs. 2.2%; industrial production 1.4% vs. 2%

Sterling succumbs to easing growth in Britain

The Bank of England left its monetary policy unchanged leaving interest rates at 0.5%. The move was widely expected as the country see’s a slowdown in growth with the third quarter GDP looking to ease to 0.5% after the second quarter gained 0.9% and the first estimates for Q3 GDP coming in lower at 0.7%. The Sterling lost ground despite manufacturing and industrial production data coming in better than expected. The nation’s trade deficit also widened more than expected to GBP2.8bn. Early trading session on Friday saw the Cable continue to look weak against the Greenback.

  • UK Manufacturing PMI rises to 53.2 vs. 51.5; Construction PMI declines 61.4 vs. 63.5; Services PMI 56.2 vs. 58.5
  • BoE leaves interest rates unchanged
  • Industrial production m/m 0.6%; Manufacturing production 0.4%
  • NIESR GDP estimated the UK’s economy grew at a pace of 0.7% in the third quarter
  • UK trade balance down -9.8bn v/s -9.4bn

US Dollar continues to lead the way

The US Dollar looks set to be closing this week on a high note with most of the fundamentals supporting the bullish view, raising the stakes for speculative bullish bets on the Fed’s interest rate hike timetable. This week also saw the US mid-term elections where Republicans gained control of the Senate. The markets took the results in their stride and continued to be bullish. The most notable event for the US Dollar was today’s NFP where the new jobs for October rose less than expected by 214k vs. consensus of 235k. The last month’s NFP was revised upwards to 256k while unemployment rate declined to 5.8%. While the October jobs report did not meet expectations, the overall scenario continues to support a bullish Dollar with a revised last month’s job numbers and unemployment rate improving to 5.8%

  • PMI manufacturing 55.9 vs. 56.2; ISM manufacturing 59 vs. 56.2
  • ADP employment change 230k vs. 220k
  • PMI services 57.1; ISM non-manufacturing composite 57.1 vs. 58
  • Change in nonfarm payrolls 214k; Unemployment rate 5.8%Motr

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