Good morning

High Low High Low
EUR/USD 1.1050 1.1000 USD/ZAR 13.8445 13.7246
GBP/USD 1.5463 1.5422 GBP/ZAR 21.39 21.18
EUR/GBP 0.7159 0.7127 USD/RUB 64.77 61.97
GBP/EUR 1.4031 1.3968 USD/ILS 3.9000 3.8400
USD/JPY 120.64 120.25 S&P 500 2081 2070
GBP/CHF 1.5248 1.5207 Oil (Brent) 50.19 49.46
GBP/AUD 2.1736 2.1567 Gold 1143.0 1134.0

Finally a decent number out of China this morning, China Manufacturing PMI printed 48.30 vs 47.20 previously and 47.50 expected. These kind of results play strongly into the hands of the FED giving them the “firepower” to raise US rates. We have noted previously that the FED are “data dependant” and will be looking for signs of growth and stability when they finally make their decision as to when they can hike rates. Needless to say, one positive result doesn’t mean it is time to open the Champagne, there is still a great deal of work to be done. This Friday’s NFP numbers will be watched very closely given the number has been on a downward spiral since June’s +280k print. September saw +142k so we will be watching and waiting to see if the trend is continuing or whether we have turned the corner and heading back up again. The next 6 weeks in fact will be critical for the FED as US economic data will signify whether the FED can in fact raise in December or whether they need more time for the global (and US) economies to stabilise before hiking. For this reason expect volatility levels to rise and for markets to trade violently  the decision draws ever closer.  With China cutting rates and the ECB signalling that further QE is possible (as well as further reductions, into negative, of monetary policy) the FED will probably be feeling a little more confident that everyone else is doing their part and thus any rate hike in the US should not be too disruptive to both the EU and Chinese economies…

GBP rallied on the open in Europe as the market continues to sell the EUR, which has seen the GBPUSD rise to over 1.5450 at the time of writing and EURGBP dip below 0.7150 psychological level. this is a positive trend for the GBP, however what you need to keep in mind is if the USD does start to rally strongly (vs EUR) EURUSD will fall but the question is how quickly will GBPUSD go with it. This all means that EURGBP could see further falls over the coming weeks.


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