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02 November 2020

Private Sector PMIs, COVID-19, and U.S Politics Keep the EUR, GBP, and USD in Focus

For the EUR

It’s a busy day ahead on the economic calendar.

Key stats include October manufacturing PMI figures for Italy and Spain. Finalized PMIs are also due out of France, Germany, and the Eurozone.

Barring any marked downward revisions, expect Italy and the Eurozone’s PMIs to have the greatest impact.

Away from the economic calendar, U.S Presidential Election jitters, updates on Brexit, and COVID-19 will also influence.

At the time of writing, the EUR was down by 0.02% to $1.1645.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. October’s finalized manufacturing PMI is due out later today.

Barring a marked downward revision, however, the PMI will unlikely have an impact on the Pound.

Expect Brexit and COVID-19 updates to be the key drivers on the day. An expected announcement to reintroduce lockdown measures will be pound negative , while any positive updates on Brexit would provide support.

At the time of writing, the Pound was down by 0.06% to $1.2939.

For the USD

It’s a relatively busy day ahead for the U.S Dollar.

Key stats include finalized Markit Manufacturing PMI numbers and the market’s preferred ISM Manufacturing PMI.

Barring particularly dire numbers, however, the stats will likely have a muted impact on the Dollar and market risk sentiment.

Sentiment towards the U.S Presidential Election and COVID-19 news updates will be the key drivers.

At the time of writing, the Dollar Spot Index was up by 0.01% to 94.052.

EUR/USD faces strong support around 1.1580 – UOB

24-hour view: “EUR dropped to a low of 1.1638 last Friday before closing on a soft note at 1.1647 (-0.23%).

The decline is oversold but is not showing sign of stabilization just yet. From here, EUR could dip below the major support at 1.1610 but for today, the next support at 1.1580 is likely out of reach.

On the upside, a move above 1.1695 (minor resistance at 1.1670) would indicate the current weakness has stabilized.”

Next 1-3 weeks: “In our latest update from last Thursday (29 Oct, spot at 1.1745), we indicated that ‘the improvement in downward momentum suggests the risk remains on the downside but EUR has to close below 1.1685 before a more sustained decline can be expected’.

We added, ‘the next support is at 1.1610’. EUR subsequently closed below 1.1685 and dropped to a low of 1.1638 last Friday.

From here, a break of 1.1610 would not be surprising but the next level at 1.1580 is a solid support and may not be easy to crack.

All in, the current negative phase is deemed as intact as long as EUR does not move above 1.1745 (‘strong resistance’ level previously at 1.1835).”

GBP/USD could recede to the 1.2850 area – UOB

Key Quotes

24-hour view: “GBP traded between 1.2900 and 1.2988 last Friday (within last Thursday’s range) and registered an ‘inside trading day’.

The price actions suggest GBP is ‘undecided’ for now. That said, the underlying tone is a tad soft and this could lead to a drift lower but any decline is unlikely to break last week’s low near 1.2880 (minor support is at 1.2900).

Resistance is at 1.2960 followed by 1.2990.”

Next 1-3 weeks: “Last Thursday (29 Oct, spot at 1.3025), we held the view that ‘while downward momentum has improved a tad,

it is premature to expect a clear break of the solid support at 1.2900’. However, GBP subsequently dropped to a low of 1.2882 before rebounding.

Downward momentum has improved further but still appears lackluster for now. From here, GBP is deemed to be under mild downward pressure and could gravitate towards the major support at 1.2845. On the upside, a break of 1.3030 would indicate the current mild downward pressure has eased.”

USD/JPY still looks to 104.00 in the near-term – UOB

Key Quotes

24-hour view: “USD closed little changed at 104.64 (+0.03%) last Friday. While the underlying tone has firmed somewhat, any advance from here is viewed as part of a higher trading range of 104.50/105.00. In other words, a clear break of 105.00 is not expected.”

Next 1-3 weeks: “There is not much to add to our update from last Thursday (29 Oct, spot at 104.35). As highlighted, ‘downward momentum has improved albeit not by much’. We added, ‘the risk of a break of 104.00 has increased and would continue to increase as long as USD does not move above 105.00’. While USD subsequently dropped to a low of 104.01, it has not been able to make much headway on the downside. From here, a break of 104.00 is not ruled out just yet but in order to rejuvenate the current flagging downward momentum, USD has to move and stay below 104.50 these few days or a break of 105.00 would indicate that USD is not ready to move below 104.00.”

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