(01 November 2019)DAILY MARKET BRIEF 2:USD relaxing ahead of jobs report
The most expected Fed hawkish cut followed by the negative release of September Core PCE and Chicago PMI have maintained
investors on the sideline ahead of key labor and manufacturing data to be released today. Considering the latest statement from Fed
Governor Jerome Powell and a dull bias on upcoming data, the greenback should decline slightly. Although it has decided not to ease interest
rates, the Bank of Canada also seems more dovish, but it should not reduce its rates by 2020, making the loonie the most attractive currency in
the G10 thanks to its interest rate advantage.
The center of attention now turns on today's October unemployment data, which is expected to mark at 3.60% (prior: 3.50%), as the 40-day
long General Motors strike launched in mid-September with a total of 46000 GM employees on strike in October and classified as unemployed,
is expected to weigh on the measure as well as manufacturing data. Despite disappointing October Chicago PMI figures displaying at 43.2
(prior: 47.1; consensus: 48), lowest since December 2015 due to growing uncertainties relating to Boeing plants located in the region, ISM
manufacturing data are expected to improve from September 47.8 range, although it should stay in contraction territory. However, it
should be kept in mind that the latter will not have a major impact on the Fed's economic assessment following yesterday's FOMC meeting as it
considers current rates level as appropriate for the foreseeable future amid moderate growth and muted inflation along the 2% range.
Following the releases, USD/CAD is expected to reverse, approaching 1.3135 from current 1.3167.
By Vincent Mivelaz
