01.11.2016 Daily Market Analysis


After a slow start to the week, the first day of November has seen some early action that will likely continue till Friday, when the US releases its Nonfarm payrolls report.

On Monday, the US dollar (USD) posted gains against all major currencies except the Australian dollar (AUD) and the British pound (GBP). The AUD has extended the gains to today after China released upbeat Manufacturing data and the RBA (Reserve Bank of Australia) maintained a neutral monetary policy stance. The RBA kept interest rates unchanged at 1.50% and it was neither hawkish nor dovish in its rate statement. On the other hand, the GBP rallied yesterday after UK’s Prime Minister Theresa May promised to support BOE Governor Carney’s bid for another stint at the helm of the bank. The market viewed this as a vote of certainty in the medium term. GBP traders are now looking out for UK Manufacturing data set to be released during the London session today.

The Bank of Japan has also maintained the status quo by keeping rates steady at -0.10%. The bank also kept its monetary policy unchanged but cut its CPI estimates. This has kept the demand for the Japanese yen (JPY) relatively flat but increased the demand for the dollar. Traders are now waiting for the BOJ press conference that will held anytime during the day for more clues.

The other commodity currencies, the Canadian dollar (CAD) and New Zealand dollar (NZD), both edged lower against the USD on Monday. The CAD was weighed down by crude oil prices which fell 4% as non-OPEC members, that included Russia and Brazil, met in Vienna over the weekend but no deal was struck. CAD traders will now wait on BOC Governor Poloz’s speech later today as well as the GDP figures, for some action. Meanwhile, the NZD fell on mixed data but the focus today will be on the Global Dairy Trade price index as well as New Zealand Employment figures.

The US will also release Manufacturing figures on a day that traders will have plenty to meet their appetite for volatility.