Here is what you need to know on Monday, November 1:
The greenback outperformed its rivals on the last trading day of October and the US Dollar Index (DXY) climbed to its highest level since mid-October. At the start of the new month, major currency pairs stay relatively quiet and the trading action is likely to remain subdued due to thin trading conditions. In the second half of the day, the ISM Manufacturing PMI for October will be featured in the US economic docket.
Wall Street: US House Democrats want to vote on President Joe Biden's "Build Back Better" and infrastructure bills on Tuesday after adding the latest revisions to the $1.75 trillion bill on Sunday. US stock index futures register modest gains in the early European session.
The benchmark 10-year US Treasury bond yield is moving sideways around 1.5% but investors remain focused on the flattening yield curve. Meanwhile, the 10-year German bond yield approaches the positive territory for the first time since May 2019.
Over the weekend, World leaders voiced their commitment to solving the global supply chains issues. "We have to take action now, together with our partners in the private sector, to reduce the backlogs that we’re facing," Biden said at the G20 summit.
EUR/USD faced heavy bearish pressure in the second half of the day on Friday and erased all the gains it posted following the European Central Bank (ECB) meeting on Thursday. On Monday, the pair continues to move sideways around 1.1550 but stays dangerously close to the 2021-low it set at 1.1524 in early October.
GBP/USD is trading at its weakest level since mid-October around 1.3660 pressured by the renewed Brexit concerns and broad-based USD strength.
AUD/USD edges lower at the start of the week but stays afloat above 0.7500 for the time being. Earlier in the day, the data from China showed that the Caixin Manufacturing PMI improved modestly to 50.6 in October, surpassing the market expectation of 50.
USD/JPY shot above 114.00 on Friday and preserves its bullish momentum on Monday with the dollar strength providing a boost.
Gold failed to hold above $1,800 last week and staged a sharp U-turn on Friday. Currently, XAU/USD is moving sideways around $1,780.
Cryptocurrencies: After rebounding above $60,000, Bitcoin spent the weekend fluctuating in a relatively tight range with $62,000 area acting as near-term resistance. Ethereum staged a technical correction after renewing all-time highs but it doesn't seem to be having a difficult time holding above $4,000.
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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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