Market Drivers November 4, 2019

• Risk on opens in the week in FX
• AU Retail sales miss
• Nikkei closed Dax 0.807%
• UST 10Y 1.75%
• Oil $56/bbl
• Gold $1509/oz
• BTCUSD $9175

Europe and Asia:

• AUD AU Retail Sales 0.2% vs. 0.5%
• EUR EZ PMI Final 45.9 vs. 45.7

North America:

• USD Factory Orders 10:00

Currencies started the week with a decidedly risk on flair, boosted by stronger than expected NFP results on Friday, progress in US-China trade talks and what appears to be stabilization in the European manufacturing sector.

The feel-good vibes from the better than expected Friday’s Non-Farm Payroll numbers carried over into Asian and European trade today with Dax up nearly 1% on a rebound in risk sentiment. While the US employment data was hardly torrid, it nevertheless beat the muted forecasts and allayed fears that the economy was slowing materially ahead of the key Christmas spending season.

Friday’s beat also helped boost US yields as expectations of any additional rates cuts by the Fed have tumbled to 10%. USDJPY has responded in kind rising slowly throughout the night but has yet to break through the key 108.50 resist level. We noted over the weekend that the pair must hold the key 108.00 support if it is to preserve its short term uptrend and so far it is able to do so, but a true bullish impulse will only be confirmed if US corps can close the pair above the 108.50 by the end of the day.

Elsewhere, the news out of Europe was a little bit sunnier as final EZ Manufacturing PMI printed at 45.9 vs. 45.7 eyed as the region’s manufacturing sector appears to have stabilized. The euro continues to trade well against the buck and all eyes today will be in the new ECB President Christine Lagarde who will make her first policy speech in Berlin at 20:30 GMT. Ms. Legarde is expected to press the European leaders for a bigger fiscal policy expansion and if she succeeds a combination of greater spending, looser monetary policy and easing of global trade tensions could prove very bullish for the currency.

For now, the focus remains on the 1.1200 level for the EURUSD as bulls try to press their trades to take out the upper end of the range that has persisted for more than three weeks.