Forex Today: Risk flows return, focus shifts to PMI data


Here is what you need to know on Tuesday, October 24:

Market mood continues to improve early Tuesday following the news of Israel delaying a ground assault to wait for the arrival of additional American forces to the region and Hamas releasing two Israeli hostages. Later in the day, S&P Global will release the Manufacturing and Services PMI surveys for the Euro area, the UK and the US. The US economic docket will also feature S&P/Case-Shiller Home Price Indices and Richmond Fed Manufacturing Index data for October. 

Reflecting the positive shift seen in risk sentiment, US stock index futures are up between 0.3% and 0.6% in the early European session. The US Dollar Index lost more than 0.5% on Monday and was last seen consolidating its losses near 105.50. Meanwhile, the benchmark 10-year US Treasury bond yield is down nearly 1% on the day at around 4.8% after falling more than 1% on Monday. 

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Pound Sterling.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.70% -0.84% -0.20% -0.78% -0.31% -0.61% -0.22%
EUR 0.69%   -0.14% 0.49% -0.09% 0.39% 0.09% 0.49%
GBP 0.86% 0.14%   0.64% 0.05% 0.55% 0.25% 0.63%
CAD 0.20% -0.48% -0.65%   -0.57% -0.09% -0.40% 0.00%
AUD 0.78% 0.11% -0.04% 0.58%   0.49% 0.18% 0.54%
JPY 0.30% -0.40% -0.57% 0.09% -0.56%   -0.31% 0.09%
NZD 0.63% -0.09% -0.25% 0.40% -0.19% 0.31%   0.37%
CHF 0.24% -0.49% -0.64% 0.01% -0.59% -0.09% -0.40%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

EUR/USD registered strong gains on Monday and climbed to a fresh multi-week high near 1.0700 early Tuesday. After the data from Germany showed that the economic activity in the private sector contracted at an accelerating pace in early October, however, the pair erased its daily gains. At the time of press, EUR/USD was trading flat on the day above 1.0650.

ILO Unemployment Rate in the UK edged lower to 4.2% in three months to August, the UK's Office for National Statistics reported on Tuesday. In September, the Claimant Count Change rose by 20.4K, compared to the market expectation of 2.3K. GBP/USD showed no reaction to these figures and was last seen trading in positive territory above 1.2250.

In the Asian trading hours, the data from Australia revealed that the S&P Global Composite PMI declined to 47.3 in October's flash estimate from 51.5 in September. AUD/USD ignored this disappointing data and benefited from risk flows, rising toward 0.6400. In the early Asian session on Wednesday, third-quarter Consumer Price Index (CPI) data from Australia will be watched closely by market participants.

In Japan, Jibun Bank Manufacturing PMI held steady at 48.5 but the Services PMI fell to 51.5 from 53.8. After fluctuating in a narrow channel slightly below 150.00 on Monday, USD/JPY lost its traction and declined below 149.50.

Gold staged a downward correction on Monday but managed to limit its losses amid falling US T-bond yields. Early Tuesday, XAU/USD stabilized above $1,970.

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