The US jobs data was stronger than consensus forecasts which underpinned confidence.
The US jobs data was stronger than consensus forecasts which underpinned confidence. The impact was offset by ISM data which signalled further manufacturing contraction.
The dollar failed to sustain an initial advance against European currencies and traded close to 3-month lows as global recovery hopes curbed US currency demand.
Risk appetite held firm with equities making net gains amid positive US-China trade rhetoric and bond yields increased.
Yen demand remained subdued as demand for defensive assets faded while weak inflation data undermined the Swiss franc.
US non-farm payrolls increased 128,000 for October, above consensus forecasts of 90,000 and there was a notable upward revision to 180,000 for September from 136,000 reported previously. There was an impact from the GM strike as the motor vehicles sector recorded a monthly jobs decline of over 40,000 on the month which suggested solid underlying jobs gains.
The UK PMI manufacturing index strengthened to a 6-month high of 49.6 for October from 48.3 and above consensus forecasts. Orders and production declined with activity supported by stock-building ahead of the potential October 31st EU exit. Exports improved slightly but, given a further Brexit delay, there will be the risk of a fresh dip in activity late in 2019.
Prime Minister Johnson rejected the Brexit Party offer of an alliance and Sterling lost some territory amid fears that votes could leak from the Conservatives and potentially increase the risk that the current Brexit deal would be rejected. GBP/USD held below 1.3000 while GBP/EUR rallied to 1.1600 after finding support near 1.1560.
The Lloyds business barometer strengthened to 6 for October from 2 previously and Sterling should gain some support from increased confidence in the global growth outlook. CFTC data recorded a decline in short, non-commercial Sterling positions to 5-month lows, lessening the scope for further short covering with GBP/USD little changed around 1.2930 on Monday.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 08:45 | Markit/ADACI Mfg PMI(OCT) | 48 | 47.8 |
| 08:50 | Markit Mfg PMI(OCT) | 50.3 | 50.5 |
| 08:55 | EUR German Manufacturing PMI (M/M)(OCT) | - | 41.9 |
| 09:00 | Euro-Zone PMI Manufacturing(OCT) | 45.6 | 45.7 |
| 09:30 | GBP PMI Construction(OCT) | 45 | 43.3 |
| 09:30 | Euro-Zone Sentix Investor Confidence(NOV) | -13 | -16.8 |
| 15:00 | USD Factory Orders(SEP) | -0.20% | -0.10% |
| 21:30 | AUD AiG Performance of Service Index(OCT) | - | 51.5 |