Friday’s NFP gave support to equity markets


After closing out Friday over 300 points higher, based on the surprising NFP number, DOW Futures are indicating a higher opening later this morning. The positive market sentiment is as usual linked to the positive “vibes” emerging from the US-China trade negotiations. Impeachment talks in Washington do not seem to be affecting the markets at this point.  


Markit’s Purchasing Managers Index for the manufacturing sector beat expectations, though remains below the 50 level, which reflects continuing contraction. Final eurozone PMI came in at 45.9, better than the 45.7 number expected. There was good news for Germany as their number moved from 41.9 to 42.1. Traders will focus today on new ECB President Christine Lagarde, who delivers her first speech in Berlin. If her speech discusses fiscal policy, this may offer some aid to the EUR, as traders will expect this means no further monetary easing.


GBP is trading quietly this morning as a Reuters poll shows PM Boris Johnson leading the Labor opposition ahead on the general election slated for Dec. 12. UK Construction PMI came in as expected at 44.2. Bank of England meets later this week. No rate cut is expected at the meeting, but the accompanying statement will be closely watched. 


The Japanese Yen was slightly weaker overnight as traders moved away from safe haven trading concerns as the week begins. Japan was on holiday today, adding to the slow trade. Talks continue between the US and Japan regarding tariffs on Japanese car imports to the US.


Manufacturing PMI improved to 51.2 in October form 51 in September, helping firm the Canadian Dollar. Oil prices moved slightly higher in early morning trading, further aiding the Loonie. Oil prices are appearing to follow the trade talks between the US and China with positive news from the talks giving traders confidence in trading. As a commodity currency, the Canadian Dollar is influenced by oil trades.


Exports from China are forecasted to have fallen by 3.5% year-on-year in October, which is worse than the 3.2% number for September. Imports have fallen 8.9% year-on-year. US Commerce Secretary declared on Sunday that the trade agreement with China was “particularly complicated”. He added that “we’re in good shape, we’re making good progress, and there’s no natural reason why it couldn’t be”, regarding an eventual signed agreement.

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