Today’s Data to Watch
1. European PMIs from 08:15 (Starting with French Data)
The euro has been weakening as ECB speakers express confidence that inflation is falling towards target, signaling potential rate cuts. With the USD hitting key resistance and ECB rhetoric driving EUR weakness, a surprise beat in European PMIs could push EUR/GBP higher. Given that the Bank of England (BoE) is expected to lean towards rate cuts (UK rates are still at 5%), EUR/GBP buyers could be attractive on strong PMI prints.
Key Points
- Focus starts at 08:15 with French data, followed by 08:30 German data.
- By the time Eurozone-wide data is released, market reactions are often muted.
Levels to Watch (EUR/GBP Buyers on Strong Data)
- French Manufacturing Flash PMI (Oct 2024): 45.9 or higher.
- French Services Flash PMI (Oct 2024): 50.6 or higher.
- French Composite Flash PMI (Oct 2024): 49.6 or higher.
08:30 - German PMIs
- German Manufacturing Flash PMI (Oct 2024): 42.0 or higher.
- German Services Flash PMI (Oct 2024): 51.3 or higher.
German Composite Flash PMI (Oct 2024): 48.5 or higher.
Potential Trades
- If these data prints beat expectations, EUR/GBP could see a rally towards 0.8400 and possibly up to 0.8500.
- Be cautious as UK PMIs at 09:30 may shift the focus back to GBP.
UK PMIs @09:30
If we see a miss in UK PMI data, expect GBP weakness as markets are poised to sell the pound on any signs of slower growth. With inflation falling faster than the BoE anticipated, weak PMIs could push the central bank towards more aggressive rate cuts.
Potential Trades
- UK Flash Composite PMI (Oct 2024): 50.9 or lower.
- UK Manufacturing PMI (Oct 2024): 50.4 or lower.
- UK Services PMI (Oct 2024): 50.9 or lower,
Potential Trades
- If earlier European PMIs beat expectations, also expect EUR/GBP buying.
3. US Jobless Data @13:30
A miss in US jobless claims could trigger USD weakness, as markets may price in more urgent rate cuts.
Levels to Watch (USDJPY Sellers on Weak Data)
- US Initial Jobless Claims (W 19 Oct): 295K or higher.
- US Continuing Jobless Claims (W 12 Oct): 1.92M or higher.
Potential Trades
- Expect a short-term drop in USD with USD/JPY sellers.
- EUR/USD buyers could be considered if earlier European PMIs were strong.
4. US PMIs @14:45
If we also see a miss in US PMI data, this could reinforce USD weakness on today’s technical pullback.
Levels to Watch (USD/JPY Sellers on Weak Data)
- US Manufacturing Flash PMI (Oct 2024): 46.5 or lower.
- US Services Flash PMI (Oct 2024): 53.4 or lower
Potential Trades
- Expect further USD/JPY selling.
- EUR/USD buyers could be considered if earlier European PMIs were strong.
Notable Speaker: BoE’s Bailey @20:45
Watch for BoE’s Bailey to signal aggressive rate cuts, which could push the GBP lower.