FXPRIMUS DAILY MARKET REPORT

Economic Insights



Single currency reaches another high on “Greece hope”

Yesterday, European Union (EU) finance ministers couldn’t reach a deal on Greece’s bailout plan and decided to delay the decision until next Monday. However, German Chancellor Angela Merkel showed optimism for reaching a final deal by 26November. The EUR rebounded to a couple-week high and stood above 1.28 again.Source: BloombergClick the image to enlarge

The main divergence is from the European Central Bank (ECB) and International Monetary Fund (IMF), causing the meeting to not reach an outcome. Merkel highlighted prolonged progress and didn’t expect that the issue would be settled in a short period. Through Merkel’s language, there is stronger determination from Germany to defend the currency bloc. Starting from today, European leaders will hold the EU Summit for budgetary discussion.

“HSBC version Purchasing Managers’ Index (PMI)” jumps above 50

HSBC flash manufacturing PMI surged to 50.4, showing potential that its final print might stay above 50 for the first time since the beginning of the year. The October manufacturing PMI from HSBC and Markit was 49.5.

The figure released earlier today, together with previous releases, proved firm bottom signs and a possible sustainable pick-up, reducing further monetary policy easing in the near future since there is still momentum.

The People’s Bank of China (PBOC) used reverse repo instead of reserve requirement cuts as primary methods of injecting liquidity into China’s financial system. The main reason behind this may be to avoid appearing too dovish, which could encourage investors to move back into China’s property sector and further exacerbating the bubble in property prices. It could also be a message that it could liberalize the rate in the future.


Currency Insights

AUDUSD – Look for the opportunity once it dips

It seems that downside risk for the Aussie reduced significantly after China and the Euro Zone showed less tail-risks.

In the H4 Chart, the AUDUSD still holds well above 1.0340 and has some pressure when it reaches 1.0410.Source: BloombergClick the image to enlarge




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