European FX Open - Month-end!

Month-end!

On potential month-end flows, there has not been too much in the way of speculation.

We wrote Friday via contacts that BARCLAYS say their passive month-end rebalancing model shows weak USD buying against most majors, neutral against EUR and weak USD/YEN selling.

The USD is giving back ground in later exchanges, but so far it has bee an outsize broad material winner in October.

Overnight, the BOJ left its target rate at 0.25% as widely expected. Outsize loser during the month the YEN is in comeback mode after the central bank raised its growth forecast.

Meanwhile, EUR/USD is supported by comments from perceived hawks. Nagel said the Bank should take a careful approach to lowering rates and not rush further cuts and Schnabel stated that a “gradual approach to removing policy restriction remains appropriate.” The more dovish Panetta and Escriva are among the speakers today.

Data wise, we get German retail sales for September at the top of the hour followed by the likes of French and Italian CPI as well as the Norges Bank's daily FX purchases for November.

In the second half, US PI/personal spending and the PCE leads. For the latter, softer y/y reads are expected in the Fed's preferred measure of inflation.

Challenger job cuts and weekly initial claims (forecast 230k) as well as the employment cost index will also garner interest, particularly after the ADP version boomed and doubled expectations yesterday.

And out of Canada, there is August GDP, seen at 0.0% m/m and 1.5% y/y.

Elsewhere, China's manufacturing PMI rebounded into expansion territory for the first time since April in October at 50.1 vs the 49.9 consensus and 49.8 outturn the month previous, suggesting recent stimulus may already be working to to boost growth momentum.

And ahead of the November 5 election, Democrat candidate Harris said she “strongly” disagreed with 'garbage' comments made by President Joe Biden that have been seized on by Republicans as insulting to Donald Trump’s supporters, seeking to distance herself from a brewing controversy that threatens to undercut her momentum in the final week of campaigning. in the RealClearPolitics poll average, Trump has a tiny 48.4 vs 48.0 lead, with betting markets showing a bigger lead for the former president (8/13 vs 28/17).

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