Forex Market Morning Run Down – USD, EUR, GBP, JPY

The euro recovered in the Asian session after tumbling on Thursday to trade at 1.2657. This morning the euro added 11 points to rebound to 1.2657. Yesterday, Eurozone PMI’s reported on the upside along with Germany. The French manufacturing slid to 47.3 in October, from 48.8 the previous month, Markit Economics said. The median estimate in a Bloomberg News survey of analysts was for a reading of 48.5. A similar index for the services industry fell to 48.1, below the 50 level which separates expansion from contraction for a second month. The Purchasing Managers’ Index showed manufacturing in the region unexpectedly grew this month, while Spain’s economy showed signs of a further recovery, with third-quarter unemployment dropping to the lowest level since 2011. In Germany, factories rebounded from a slump in September. The numbers suggest the euro area “has so far avoided a slide back into recession this year,” said Chris Williamson, chief economist at Markit in London. At the same time, “growth is so anemic that increasing numbers of companies are being forced into cutting staff and prices.” With the euro-area economy still at risk, the European Central Bank is in the midst of a new round of stimulus to revive growth and inflation. The Frankfurt-based institution started buying covered bonds on Oct. 20 and plans to purchase asset-backed securities before the end of the year in an attempt to boost growth and prices in the region.

Inflation in the eurozone was 0.3 percent in September, far from the ECB’s goal of just below 2 percent. Today’s PMI report showed that companies cut prices by the most since February 2010 to try to boost demand.

The US dollar gave back some of yesterday’s gains to trade at 85.88 down by 8 points after climbing close to the 86 range after the release of the weekly US jobless claim total. The weekly release printed at forecast which is much lower than it has been in years. Figures from the Labor Department showed fewer workers filed claims for jobless benefits over the past month than at any time since May 2000. Traders are now focused on next week’s Federal Reserve meeting. Confidence will probably keep climbing as consumers feel more secure in their jobs and gasoline prices retreat to the lowest level in three years. Bigger wage increases would help keep sentiment improving and lay the groundwork for gains in spending that will boost growth even as economies in Europe and emerging nations cool.

The pound was a big mover yesterday after another release of weak data. UK retail sales printed under forecast. The GBP tumbled a third day versus the dollar, the longest losing streak in almost three weeks, after a report showing sales slid more in September than analysts forecast added to concern the economy is faltering. The pound is flat this morning at 1.6032.

The Japanese yen took a big tumbled to trade above the 108.00 level but gave back 20 points this morning as traders sold off to book profits on the strong moves on Thursday evening. BoJ Governor Haruhiko Kuroda said this month a weaker yen in line with the fundamentals of the economy is positive. He also said the BOJ will increase its unprecedented stimulus program if needed. Japan sold three-month bills today at minus 0.0037 percent, with a government-debt sale drawing a negative yield for the first time. The yen is the second-biggest loser of the day versus the greenback.