Paul Gallacher
City Trading & Investment
Market Commentary
The flash estimate for China’s Manufacturing PMI for October showed the level of activity accelerating at a faster pace compared to September. The headline reading came in at 50.4 vs. prev. 50.2.
It has been a PMI day so far for the markets. French services and manufacturing data missed expectations and continued to indicate an accelerating pace of broad contraction in business output. German manufacturing PMI edged above 50 in October, whereas the level of services activity remained muted. Overall for the Eurozone, manufacturing PMI came in at 50.7 vs. prev. 50.3.
Initial Jobless Claims came in slightly higher than previous at 283k vs. prev. 266k, whereas Continuing Claims fell from 2,389k to 2,351k.
The only notable data release left for the day is just post-cash open at 2:45 in the shape of US Manufacturing PMI.
Intraday Strategy: E-mini S&P
The E-mini S&P remained range-bound between the overnight high and the European morning low throughout most of the session yes-terday before declining to set the low of the day at 1920.25, thus extending the distribution range at the highs. At the moment, the December contract is trading at the highs of the aforementioned distribution.
We are once again favouring conservative positioning for today’s session, going with an entry at 1920.25, targeting an initial push to the pivot and a potential extension towards the highs of the range. There is scope to use the highs of the current range for positioning if US Manufacturing PMI provides impetus for an upside break.
Intraday Strategy: EUR/USD
The EUR/USD has been gradually declining throughout this week - with the first wave of selling pressure inspired by ECB source comments on the potential for further accommodation in the shape of corporate bond purchases. USD strength throughout the week added to the selling pressure in the currency pair, prompting the price action to span and confirm the range between last week’s range (1.2605 - 1.2887).
We still feel that there is still worth in positioning on the conservative side in the EUR/USD vs. going for a more aggressive entry. As such, we are aiming to sell into a pullback to the lower boundary of the range that has been in place throughout the latter part of last week.
Technical Analysis: Nasdaq and DJIA
Both Nasdaq and DJIA are pushing higher following a muted overnight consolidation phase.
Technical Analysis: Bund and US 10-year T-note Futures
Both US and German 10-year government bond futures are holding value having pared some of the aggressive safe haven inflow gains sustained in the last fortnight.
Technical Analysis: GBP/USD and USD/JPY
Moderate strength in the USD is evident so far today. GBP is slightly weaker across the board following weaker than expected September Retail Sales.
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