Here is what you need to know on Thursday, October 24:
- Brexit: GBP/USD has stabilized around 1.29 as the EU is considering a delay to the UK's exit. France reportedly wants only a short delay from October 31 to November 15, while other countries tend to approve a postponement to January 31, 2020 – as stated in Britain's extension request. A long delay will likely result in snap elections while a short one in another push to complete legislation. Brussels will likely indicate its decision on Friday.
- Mario Draghi, President of the European Central Bank, will preside over his last decision at the helm. He will likely defend his eight-year tenure, and mostly his last decision to cut rates and restart the bond-buying scheme. If he justifies the stimulus by painting a dark picture of the euro-zone economies, EUR/USD may struggle. Preview: Draghi's defense of his legacy may drag EUR/USD down
- Ahead of the ECB's decision, preliminary euro-zone Purchasing Managers' Indexes for October will provide an update on the economy. See Three reasons why EUR/USD may fall without waiting for Draghi
- Several other countries will announce their rate decisions today, with Turkey standing out. US President Donald Trump announced that he is lifting sanctions after Ankara committed to a permanent ceasefire in Northern Syria. The CBRT is set to cut interest rates. USD/TRY volatility is set to remain high.
- The market mood has somewhat improved, with the safe-haven USD, JPY, and Gold in retreat. US Vice President Mike Pence will deliver a significant speech on China later in the day, and markets will watch it as guidance for trade talks.
- US data: US Durable Goods Orders for September provide an indication for US GDP next week and are set to move markets. Preview: Business spending continues to restrain durable goods. Weekly Unemployment Claims, News Home Sales, and Markit's PMIs are also of interest.
- Cryptocurrencies are licking their wounds at lower ground, with Bitcoin trading below $7,500. Facebook founder Mark Zuckerberg testified on Capitol Hill and defended the social media's Libra cryptocurrency project. He seemed to have failed to convince lawmakers that the project is needed and that it will compete with Chinese initiatives.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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