November’s preliminary PMI figures to be released

The main event of yesterday was the much-awaited US employment data for September. The release sent mixed signals as on the one hand, the NFP was higher than expected, reaching 119k, which was a positive surprise for the markets, yet in the other hand, the unemployment rate ticked up to reach 4.4%. Understandably, the release failed to alter the market’s expectations for the Fed to remain on hold in the December meeting, allowing practically for volatility to remain relatively low. Both the USD and gold’s price remained relatively stable. On the other hand, US stock markets ended their day in the reds as market worries for overvaluations of AI companies resurfaced and the release of the September US employment data failed to alter the market’s expectations for the Fed.

Today, we highlight the release of November’s preliminary PMI figures for the Euro Zone, the US and the UK. We intend to focus on the Eurozone as growth is a major issue. Especially the figures related to France’s services sector, Germany’s manufacturing sector and the Eurozone’s Composite PMI figure for a rounder view, are expected to provide some volatility for EUR pairs. The figures are expected to rise, yet the Eurozone’s economic powerhouse, Germany’s manufacturing sector, is expected to remain below the reading of 50, implying another contraction of economic activity. Should the rise exceed market expectations, we may see the common currency getting some much-needed support.

EUR/USD tended to stabilise yesterday and during today’s Asian session, just below the 1.1570 (R1) resistance line. Given that the pair’s price action was able to break the downward trendline guiding it, we tend to maintain a bias for a sideways motion for the time being. Yet we note that the RSI indicator remains below the reading of 50, hence we issue a warning for a possible revival of bearish tendencies. For a bearish outlook to emerge we would require the pair to start actively aiming if not reaching the 1.1265 (S1) support line. For a bullish outlook to emerge we would require the pair to break the 1.1570 (R1) resistance line and start aiming for the 1.1825 (R2) resistance level.

JPY tended to gain some ground against the USD in today’s Asian session. Yet the Yen has weakened 6.5% against the USD since the start of October and BoJ and the Japanese government are worryingly monitoring the situation as the movement over the past two weeks is intense and one sided. Hence, as JPY continues to weaken, the wider the possibility of a market intervention to JPY’s rescue.

On a technical level we note that USD/JPY corrected a bit lower ion today’s Asian session, yet remains well above the 156.00 (S1) support line. We intend to maintain a bullish outlook for the pair as long as the upward trendline characterising the pair’s movement since the 3rd of October remains intact. Please note that the RSI indicator despite correcting lower, remains at the reading of 70, implying that the market sentiment for the pair remains strong. Should the bulls maintain control over the pair we may see USD/JPY breaking the 158.80 (R1) resistance line and start aiming for the 161.90 (R2) resistance level. Should the bears take over, we may see the pair’s price action dropping breaking the 156.00 (S1) support line , continue to break the prementioned upward trendline in a first signal of an interruption of the upward movement and continue lower to start aiming for the 152.90 (S2) support level.

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Today we get the UK’s retail sales for October, and Canada’s retail sales for September and from the US, the final UoM consumer sentiment for November. On a monetary level, we note that ECB Vice President De Guindos, ECB President Christine Lagarde, NY Fed President Williams, SNB Chairman Martin Schlegel, Fed Board Governor Barr, Fed Vice Chair Jefferson, Boston Fed President Collins, Dallas Fed President Logan.