The pound was little changed in slow trading during today’s Asian morning session. Reports suggest that the EU will grant Britain’s request for a Brexit deadline extension, though debate is still raging as to how long. The favourite date appears to be January 31, a three-month rollover, while France is supposedly pushing for a tighter deadline of mid-November. The EU has said an announcement would be made tomorrow.
GBP/USD recovered from early losses yesterday, which saw the FX pair at one-week lows, to finish 0.33% higher at 1.2915. That snapped a two-day losing streak which had seen the pair drop 1.3% from Monday’s peak. The 23.6% Fibonacci retracement of the October 8-21 rally is at 1.2820 while the 200-day moving average is at 1.2716. GBP/USD is now at 1.2916.
GBP/USD Daily Chart
Japan manufacturing PMI slides
The flash manufacturing PMI for October, as compiled by Jibun Bank, slid to 48.5, a drop from last month’s 48.9 print and missing economists’ estimates of a dip to 48.8. It also equalled the low in March, which in turn was the lowest since June 2016.
The service sector also showed weakness, with the services PMI dropping to 50.3, the lowest reading since September last year. The authorities said that the increase in the consumption tax was a factor in the weakness in both indicators.
The response in the markets was a slight softening in the Japan225 index, down 0.08% at time of writing, though US indices remained in the black.
Japan225 Daily Chart
A quiet farewell
ECB Chief Mario Draghi chairs his last meeting at the ECB facing a slowing economy and disagreement within the committee as to how best combat it – more QE or even deeper negative interest rates. Either way, the bank is not expected to move on either point at this meeting, and it will be left to new boss Christine Lagarde to steer a decision next month.
Flash PMIs grab the spotlight
After a few quiet days, major data releases return to the calendar with flash PMIs from Markit the main attraction. The German PMI is expected to improve slightly to 42.0 in October from 41.7 last month, while the Euro-zone equivalent is likewise expected to show an increase to 46.0 from 45.7.
Across the Pond, the US reading is expected to dip to 50.7 from 51.1. The volatile durable goods orders series is seen falling 0.8% in September after a 0.2% gain the previous month, while new home sales are expected to fall 0.7% m/m after a hefty 7.1% increase in August.
The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/