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Markets start November in red

Latest economic surveys in China showed manufacturing sector slowdown continued last month but at a slower pace than previous months

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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Equity markets started November with profit taking mind-set. Asian equities traded mostly in red while the PBOC decided to boost the value of the renminbi mid-rate 0.54% stronger against the US dollar in response to the 0.62% strength in the currency on Friday. The PBOC move is considered the largest amount the fix had been set since the national currency was de-pegged from the U.S. dollar in July 2005.

Latest economic surveys in China showed manufacturing sector slowdown continued last month but at a slower pace than previous months. Caixin’s purchasing managers index edged up 48.3 in October from 47.2 in September. Sunday’s official figures also contracted in October for a third consecutive month but was 0.2 points from breaking even (A number below 50 suggests the sector shrank and above 50 means expansion).

According to Caixin: "Total new business declined only modestly, helped in part by a renewed increased in new export orders”. Export orders expanded for the first time since June and this is considered a bright spot in the report although inventories continued to fall. The impact of PBOC loosening monetary policy is not yet reflected in the figures and will be looking whether November will show expansion in the manufacturing sector.

Currency traders will be focused on Europe and U.S. revised manufacturing PMI releases. ECB chief announced the possibility of extending QE and cutting rates in his latest monetary policy meeting and it is interesting to see whether the dovish speech will have an impact on the figures. Germany’s manufacturing sector might look disappointing falling back from 51.6 level in the wake of Volkswagen scandal.  It is interesting to see whether Italy and France continue to outperform rest of Eurozone economies. Overall, the Eurozone final manufacturing PMI is seen at 52 in October which is in line with previous estimates.  In the UK, manufacturing PMI numbers are set to be revised lower and possibly getting hit by slowing mining sector. Finally will end the day with latest ISM manufacturing data from the U.S. which economists expect to continue showing weakness with dollar strength dragging the industry further. Most importantly to keep an eye on the ISM employment sub-index as Friday’s nonfarm payrolls is key event of the week.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.