ASIA session review: Euro weakens after PMI data

Data released: 

06:58 GMT France Markit Manufacturing PMI (Oct) Preliminar 49.4 50.1 49.8 

06:58 GMT France Markit Services PMI (Oct) Preliminar 50.2 51.3 51.0 

07:28 GMT Germany Markit Manufacturing PMI (Oct) Preliminar 51.5 51.5 51.1 

07:28 GMT Germany Markit Services PMI (Oct) Preliminar 52.3 53.9 53.7 

07:58 GMT EMU Markit Manufacturing PMI (Oct) Preliminar 51.3 51.4 51.1 

07:58 GMT EMU Markit PMI Composite (Oct) Preliminar 51.5 52.5 52.2 

07:58 GMT EMU Markit Services PMI (Oct) Preliminar 50.9 52.4 52.2 

The US currency rose versus the euro on Thursday after the release of weaker-then-expected PMI data. 

China remains in focus today as a strong initial economic indicator for China failed to offset pessimism over its economy. 

The initial October reading for China’s manufacturing activity came out at 50.9, compared to a final reading of 50.2 in September. The score was a seven-month high. 

The preliminary reading was among the first economic data on the region’s largest economy in the third quarter, coming less than a week after figures showed that Chinese growth picked up from a dip in the second quarter. 

EURO 

The single currency is dragging down after disappointing PMI data from the euro area. 

Data released showed preliminary Eurozone PMI Manufacturing grew to 51.3 points in October, from 51.1 points in September. Analysts expected more growth to 51.4. 

PMI Services slid to 50.9 points in October, from a 52.2 point reading the previous month and against expectations of climbing to 52.4. 

Composite PMI fell to 51.5 from 52.2 and against forecasts of a rise to 52.5. 

Meanwhile, preliminary German PMI Manufacturing increased to 51.5 points in October, from 51.1 points in September. The result is in line with market consensus. 

PMI Services dipped to 52.3 points in October, from a 53.7 point reading the previous month and against expectations of a rise to 53.9. 

EUR/USD rose to $1.3820 with resistance comes at $1.3890 (channel line from Sep 6). Closest support comes at $1.3800, below - at $1.3740 (Oct 23.lows), then - around $1.3650 (Oct 21 lows) and $1.3550 (channel line). 

POUND 

The pound approached a three-week high versus the dollar before a report economists said will show a measure of new orders at U.K. factories rose to the highest level since 1995 this month. 

The Confederation of British Industry’s manufacturing gauge increased to 10 from 9 in September, according to the median estimate of analysts. 

Sterling snapped a four-day decline against the euro before Bank of England Governor Mark Carney holds a press conference in London today. 

GBP/USD holds below yesterday’s high on $1.6250. Support comes at $1.6060 (Oct 16 high), then - at $1.5890 (Oct 16 lows) with a break under widens losses to $1.5820 (Sep 24 lows). Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs). 

YEN 

The yen strengthened the most in eight weeks versus the euro as borrowing costs for Chinese banks jumped by the most since July and rising the second day, spurring demand for safer assets. Concerns over tighter Chinese monetary policy and fears of a new wave of defaults in China's banks provoked risk-off flows. 

USD/JPY consolidates near the lower bound of the triangle pattern on the daily charts, limited today by Y99.25 - Y97.00 (strong resistance and support respectively). Below Y97.00 support comes at Y96.55 (Oct 7 lows) and Y95.80 (Aug 8 lows). Resistance is around recent highs on Y98.40 and then - at Y99.25. 

DATA AHEAD 

At 10:00 GMT CBI Industrial Trends Survey – Orders for October comes. 

US traditionally report Initial Jobless Claims at 12:30 GMT. 

Later, at 14:00 GMT, US releases Sep New Home Sales. 

Japan brings its CPI data at 23:30 GMT.

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