Europe Summary and Highlights 24 October

European morning session

The USD was generally not much changed through the European morning, but EUR/USD did manage gains of around 15 pips helped by stronger than expected preliminary October PMI data. Eurozone composite PMI rose to 52.2, its highest since May 2023, driven primarily by a sharp rise in the German services PMI to 54.5. French services PMI fell, so while the Eurozone composite index was stronger, there was some concern about the divergence within the region.

EUR/GBP was slightly higher through the morning, but off its best levels after the UK PMI also rose in October, albeit less sharply than the Eurozone index. Also the UK retail sales data for September was stronger than expected at 0.5% m/m, and showed a strong broad based gain in Q3.

The USD was slightly firmer against the commodity currencies, gaining 0.1% or more against the AUD, NOK and CAD.

Asia session

The September National CPI has closing onto 3% again at 2.9% y/y. Ex fresh food is also 2.9% and ex fresh food & energy at 3% y/y. Both the headline and ex fresh food flared up while ex fresh food & energy moderates. The inflationary pressure remains supportive for the BoJ to hike, yet it seems difficult for them to act immediately on the new PM's policy tilt. USD/JPY is trading 0.24% higher at 152.92.

After Canada announced tariff free quota on Stellantis and GM import, Trump said he terminated trade negotiations with Canada, citing false Reagan advertisement. The two trading partner has not been able to come up with a good trade agreement despite proximity. USD/CAD is trading 0.16% higher at 1.4014. The broader risk atmosphere is positive and USD higher against majors. AUD/USD is down 0.23%, NZD/USD is down 0.11%, EUR/USD is down 0.12% and GBP/USD is down 0.06%.