Daily Forex Fundamental Overview

Fundamental Analysis

EUR

"The eurozone economy showed renewed signs of life at the start of the fourth quarter, enjoying its strongest expansion so far this year with the promise of more to come".

- Chris Williamson, IHS Markit

Rising prices as well as strengthening employment outlook pushed the single currency area's two main economic sectors – services and manufacturing – flash purchasing managers' index to a 10-month high, influenced by strong growth in Germany. According to the data released, the flash Eurozone PMI manufacturing index strengthened to 53.3 for October from 52.6 the previous month. The following number was the strongest reading for 30 months and above expectations of a 52.7 reading. Moreover, the services-sector data also outperformed forecasts with an advance to a nine-month high at 53.5 from 52.2, while the composite output index strengthened to a ten-month high. The release followed strong PMIs from Germany and mixed data from France where the composite PMI declined as the services gauge went down. Overall, the figures marked an improvement from the September data, when Germany had been hit by services sector weakness and a French manufacturing downturn continued.

In the meantime, market reaction was limited with the Euro only marginally stronger and still blocked below 1.0900 level.

CAD

"So now we know why the BOC considered easing. Economic growth in the third quarter doesn't look as good as expected, inflation is below target and it's unclear where an acceleration would come from".

- Greg Anderson, Bank of Montreal

Canadian wholesale sales rose in August for a fifth consecutive month, fresh figures showed on Monday. According to Statistics Canada, the value of Canadian wholesale trade increased 0.8% month-over-month in August, compared to the preceding month's downwardly revised gain of just 0.1%, while market analysts anticipated a slight acceleration to 0.2% during the reported period. Sales advanced in five out of the seven subsectors, accounting for 80% of the wholesale trade total level. Sales in the miscellaneous subsector grew 3.9% on higher sales of agricultural supplies, which increased 11.8% in the eight month of the year due to higher exports of the wide variety of chemical products used in agriculture, such as pesticides and fertilizers. Furthermore, sales of machinery, equipment and supplies jumped 1.3% in August, driven by larger shipments of farm, lawn and garden equipment. Overall, wholesale sales rose in eight out of the ten regions. Sales also grew in energy-producing Alberta that was severely hit by wildfires in May, which forced a drastic cut to oil sands production. After the release, the Canadian Dollar rose slightly against other major currencies, trading at 1.3348 against its US counterpart, 1.4544 against the Euro, 1.0175 against the Aussie and 77.88 against the Japanese Yen.

USD

"Manufacturing showed further signs of pulling out of the malaise seen earlier in the year, starting the fourth quarter on a solid footing".

- Chris Williamson, Markit

Activity in the US manufacturing sector expanded more than expected last month, according to a private survey published on Monday. The Market Research Group said that its Preliminary Manufacturing Purchasing Manager's Index for the United States jumped to 53.2 in October, following the preceding month's final reading of 51.5 and surpassing the 51.6 market forecast. Any reading above 50 points indicates an expansion and is based on a survey of manufacturers across the country. US manufacturers recorded strongest upturn in business conditions for 12 months in October, while both output and new order growth touched their one-year peaks last month. The US manufacturing sector was hit severely by the US Dollar's sharp appreciation and weak global economic growth. Back in September, the PMI rebounded from a contractionary reading of 49.4, the first drop below the 50 point-level since February. Furthermore, some respondents mentioned there was a rise in international and domestic sales.

After the release, the US Dollar rose slightly against other major currencies, trading at 1.0890 against the Euro, 1.2233 against the British Pound and 104.08 against the Japanese Yen.

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