Euro Rises On Better Than Expected Eurozone Manufacturing PMI, Stimulus Hopes

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The euro advanced against its major counterparts in the European session on Friday, as Eurozone manufacturing PMI rose more than forecast in October and optimistic comments from House Speaker Nancy Pelosi revived the prospect of another stimulus package.

Flash survey data from IHS Markit showed that Eurozone manufacturing output growth accelerated in October at the fastest pace since February 2018.

The manufacturing Purchasing Managers’ Index rose to a 26-month high of 54.4 from 53.7 a month ago. The score was expected to fall to 53.1.

Pelosi said that negotiators were making progress in aid talks and a deal could be reached “pretty soon”.

But White House economic adviser Larry Kudlow warned that “significant policy differences” remained to craft an acceptable compromise before the election.

The final face-off between US President Donald Trump and his Democratic rival Joe Biden appeared civilized and informative than the first chaotic clash.

The candidates argued about handling Covid-19 and reopening the country, the economy, health-care reform and immigration in the debate held at Belmont University in Nashville, Tennessee.

The euro bounced off to 1.0720 against the franc, from a 1-week low of 1.0702 hit at 9:45 pm ET. The euro is seen finding resistance around the 1.10 mark.

After falling to a 3-day low of 1.1787 at 8:30 pm ET, the euro appreciated to 1.1854 against the greenback. The euro may possibly challenge resistance around the 1.20 level.

The euro was trading at 123.75 against the yen, up from a 4-day low of 123.41 set at 8:45 pm ET. The euro is likely to test resistance around the 127.5 level, if it continues its rally.

The latest survey from Jibun Bank showed that the manufacturing sector in Japan continued to contract in October, albeit at a slower pace, with a manufacturing PMI score of 48.0.

That’s up 47.7 in September, although it remain beneath the boom-or-bust line of 50 that separates expansion from contraction.

The euro was higher against the pound, at a 2-day high of 0.9057. The next possible resistance for the euro is seen around the 0.92 level.

Preliminary data from the Office for National Statistics showed that UK retail sales grew for a fifth consecutive month in September and exceeded expectations by a wide margin supported by food and online sales as well as a recovery in non-food sales.

The volume of retail sales grew 1.5 percent month-on-month in September, which was much bigger than the 0.4 percent increase economists had forecast.

The euro staged a modest recovery against the loonie with the pair trading at 1.5543. This followed a 4-day low of 1.5501 logged in the Asian session. On the upside, 1.58 is possibly seen as its next resistance level.

In contrast, the euro weakened to an 8-day low of 1.7663 against the kiwi from Thursday’s closing value of 1.7702. The euro is poised to find support around the 1.74 level.

Data from Statistics New Zealand showed that consumer prices in New Zealand rose 0.7 percent on quarter in the third quarter of 2020.

That was shy of expectations for an increase of 0.9 percent on quarter following the 0.5 percent contraction in the three months prior.

The single currency fell back to 1.6555 against the aussie, not far from a 4-day low of 1.6553 seen in the previous session. Next key support for the currency is likely seen around the 1.62 region.

The latest survey from IHS Markit showed that the manufacturing sector in Australia continued to expand in October, albeit at a slower pace, with a manufacturing PMI score of 54.2.

That’s down from 55.4 in September, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

Looking ahead, Markit’s U.S. flash composite PMI for October is scheduled for release in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com

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