Morning Market Review for 31.10.2024

EUR/USD

The EUR/USD pair is showing an uncertain decline, retreating from the local highs of October 21, updated the day before. The instrument is testing 1.0850 for a breakdown, while trading participants expect new movement drivers to emerge. Among other things, investors are focusing on September data on Retail Sales in Germany: the indicator added 1.2% after increasing by 1.6% in the previous month, while the forecast was –0.5%, and in annual terms the indicator rose from 2.1% to 3.8%, while analysts expected 1.6%. At 12:00 (GMT+2), the market will be given data on inflation in the eurozone: analysts are pricing in a slowdown in the Core CPI from 2.7% to 2.6%, while the broader measure is likely to rise from 1.7% to 1.9%. Any acceleration in inflationary pressures in the eurozone would be seen as a signal in favour of slower monetary easing by the European Central Bank (ECB). At the same time, investors have access to data from Germany, which was published the day before: the Harmonized CPI in October accelerated from 1.8% to 2.4%, with expectations of 2.1% in annual terms, and increased by 0.4% after –0.1% in monthly terms, while experts expected 0.2%. The CPI rose to 2.0% from 1.6% on an annual basis, beating forecasts of 1.8%, while the monthly figure rose 0.4%, doubling preliminary estimates. On Friday, at 14:30 (GMT+2), the US will present the October labor market report: according to preliminary estimates, Nonfarm Payrolls will be adjusted from 254.0 thousand to 111.0 thousand, and Average Hourly Earnings — from 0.4% to 0.3%. Today, at 14:30 (GMT+2), investors will pay attention to the September Personal Consumption Expenditure Price Index: the Core PCE could slow from 2.7% to 2.6% on an annual basis and accelerate from 0.1% to 0.3% on a monthly basis.

GBP/USD

The GBP/USD pair is trading with downward dynamics, developing a "bearish" momentum formed the day before. The instrument is testing 1.2950 for a breakdown, while analysts are preparing for the publication of statistics from the US. Today at 14:30 (GMT+2) the market will receive September data on the dynamics of Personal Income and Spending of American households: experts expect that Income will rise from 0.2% to 0.3%, and Spending — from 0.2% to 0.4%. In addition, investors will pay attention to the data on jobless claims: Initial Jobless Claims for the week ended October 25, according to preliminary estimates, will increase from 227.0 thousand to 230.0 thousand, and Continuing Jobless Claims for the week ended October 18 will decrease from 1.897 million to 1.89 million. Finally, the PCE price index statistics will be released today: the Core PCE is expected to slow in annual terms in September from 2.7% to 2.6%, and in monthly terms a weak increase from 0.1% to 0.3% is projected. In the UK, the market will see data on the October Nationwide Housing Prices, which could be adjusted from 3.2% to 2.8%, as well as the S&P Global Manufacturing PMI, which is likely to be fixed at 50.3 points.

Learn More

Publication date:

31 October 2024 - 11:39 (GMT)

The AUD/USD pair is showing mixed dynamics during the Asian session on October 31, holding near 0.6570. Macroeconomic statistics from Australia are putting pressure on the instrument's position. Retail Sales volumes slowed sharply in September from 0.7% to 0.1% against the forecast of 0.3%, while in the third quarter the indicator added 0.5% after –0.3% in the previous period. In turn, data on Building Permits in September reflected an increase in their number by 4.4% after –3.9% the month before, and in annual terms the indicator accelerated from 3.6% to 6.8%. Investors also paid attention to statistics from China, where NBS Non-Manufacturing PMI in October adjusted from 50.0 points to 50.2 points, while the markets expected 50.4 points, and Manufacturing PMI from the China Federation of Logistics and Supply increased from 49.8 points to 50.1 points, slightly ahead of preliminary estimates of 50.0 points. The day before, pressure on the AUD/USD pair was exerted by Australian inflation data, which increased expectations of further monetary easing by the Reserve Bank of Australia (RBA): the Consumer Price Index in annual terms in September fell from 2.7% to 2.1%, while analysts expected 2.3%, and in quarterly terms — from 1.0% to 0.2%, while experts expected 0.3%. In turn, the American currency reacted negatively to the slowdown in Gross Domestic Product (GDP) from 3.0% to 2.8%, but received strong support from the report from Automatic Data Processing (ADP) on the level of employment in the private sector: in October, Employment increased from 159.0 thousand to 233.0 thousand, while the markets expected a slowdown in the dynamics to 115.0 thousand.

The USD/JPY pair is showing a moderate decline, retreating from local highs from July 31, updated at the beginning of the week. The instrument is testing 152.90 for a breakdown, while trading participants are preparing for the publication of key macroeconomic statistics on the US labor market. Forecasts suggest a sharp slowdown in Nonfarm Payrolls from 254.0 thousand to 115.0 thousand, as well as a decrease in Average Hourly Earnings from 0.4% to 0.3% month-on-month and growth of 4.0% year-on-year. At the same time, the Unemployment Rate is expected to remain at 4.1%. At the moment, investors have at their disposal the October report from Automatic Data Processing (ADP), presented the day before and reflecting an increase in the level of employment in the private sector from 159.0 thousand to 233.0 thousand with preliminary estimates of 115.0 thousand. At the same time, the US dollar came under pressure the day before from statistics on Gross Domestic Product (GDP), which fell in the third quarter from 3.0% to 2.8%. Investors are focusing on the results of the Bank of Japan meeting today: as expected, the regulator kept the interest rate unchanged at 0.25%, without receiving sufficient grounds for further tightening of monetary policy. In the current financial year (ending in March 2025), the Bank expects the Consumer Price Index to remain stable at around 2.5%, while in the next year it could fall to 1.9%, below the target of 2.0%, while the country's GDP will increase by 0.6%. The domestic political situation in the country is putting pressure on the position of the monetary authorities: in the elections to the lower house of parliament held on October 27, the ruling coalition lost its advantage and is now forced to seek new allies or form a minority government. Additional pressure on the yen's position is being exerted by statistics from Japan on the dynamics of Retail Sales: in September, their volumes in annual terms slowed sharply from 2.8% to 0.5% with preliminary estimates of 2.3%, and in monthly terms the indicator lost 2.3% after increasing by 1.0% the month before.

The XAU/USD pair is showing a hesitant decline, still holding near record highs located near 2790.00. The instrument is approaching another psychological level of 2800.00, receiving support from growing geopolitical uncertainty. In particular, the US presidential election will take place on November 5, after which the vector of the US Federal Reserve’s further monetary policy may change. If Republican candidate Donald Trump wins, the pace of decline in borrowing costs could slow due to tightening tariff policies. At the same time, expectations regarding the upcoming meetings of global regulators are putting pressure on gold. In November, interest rate cuts are expected from the US Federal Reserve, the European Central Bank (ECB) and, probably, the Bank of England. The American regulator is most likely to adjust the rate by –25 basis points, while the European and British ones may go straight to –50 basis points. The US labor market report may have a significant impact on the future monetary policy of the US Fed: forecasts suggest a slowdown in Nonfarm Payrolls in October from 254.0 thousand to 115.0 thousand, and in Average Hourly Earnings from 0.4% to 0.3%. Today, the market will focus on statistics on price indices for Personal Consumption Expenditures: the Core indicator in September may be adjusted in annual terms from 2.7% to 2.6%, and in monthly terms — from 0.1% to 0.3%.