November 07, 2022

Daily Report 07/11/2022

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The UK construction PMI index increased to 53.2 for October from 52.3 the previous month and significantly above consensus forecasts of 50.5. New orders declined slightly on the month while supply-side pressure eased to the lowest level since February 2020 while business confidence dipped to the lowest level since May 2020. Bank of England chief economist Pill stated that interest rates will need to increase further to curb inflation, but not as high as 5.25%. The latest UK survey recorded a small decline in the long-term inflation expectations to 4.2% from 4.3% with markets expecting a dovish stance. Sterling dipped after the US jobs data with a low against the dollar, but there was a sharp reversal later in the day as the US currency posted sharp losses. Sterling opened lower in Asia after China’s denial of a coronavirus policy shift.

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The final reading for Euro-Zone PMI services-sector index was revised higher to 48.6 from the flash reading of 48.2 with a stronger than expected Spanish reading. Overall confidence in the Euro-Zone economy remained fragile with the Euro unable to gain significant support into the US open. CFTC data recorded a further surge in long, speculative Euro positions to near 106,000 contracts from 75,000 previously and the highest figure since July 2021, limiting scope for further Euro buying.

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8.40 ECB’s President Lagarde speech

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US non-farm payrolls increased 261,000 for October, above consensus forecasts of 200,000 and the September increase was revised higher to 315,000 from the original estimate of 263,000. Manufacturing jobs increased 32,000 on the month and there were employment gains across all major categories for the month. The household survey recorded an increase in the unemployment rate to 3.7% from 3.5% and above consensus forecasts of 3.6% with the number of people employment recorded as declining 328,000 while the participation rate declined marginally to 62.2% from 62.3%. Average hourly earnings increased 0.4% on the month, slightly above expectations of 0.3%, although the year-on-year increase slowed to 4.7% from 5.0%.

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