2. November 2012, 11:30

Morning Call vom 02.11.2012 von Michael Hewson, FX-Analyst von CMC Markets

European PMI?s point to recession ahead of US employment report
By Michael Hewson (Senior Market Analyst at CMC Markets UK)

Last week we saw increasing evidence that the European economy is set to remain stuck in recession with some quite simply appalling manufacturing PMI?s numbers, with a particularly sharp deterioration in France and Germany?s numbers.

Today?s final manufacturing PMI?s for October are expected to confirm last week?s bleak prognosis, with the economic slowdown now starting to infect the German core of Europe.
The numbers for Italian, Spanish, French, German and Eurozone PMI?s are expected to be confirmed at 45.5, 44.1, 43.5, 45.7 and 45.3 respectively.

Even the UK PMI?s numbers, which in the early part of the year had been outpacing the European ones by quite some distance are starting to keel over with the construction PMI number for October expected to follow in the footsteps of yesterday?s disappointing 47.5 manufacturing number, and slip back to 49.1 from 49.5 in September.
Another weak number could well increase expectations that the MPC may well let go some further stimulus next week despite comments from deputy governor Charles Bean earlier this week that cast doubt over the effectiveness of further measures to stimulate demand.

In the aftermath of hurricane Sandy President Obama has enjoyed somewhat of a renaissance as a result of his response to the crisis unfolding on America?s east coast.

Today?s US October jobs report could well be equally important for the President if the numbers continue to point to a slow decline in the unemployment rate and a recovery in the jobs market.

Yesterday?s revamped ADP numbers posted a much bigger rise than expected with an additional158k new jobs added, above expectations of 135k, while a much better manufacturing ISM number also helped. The improved ADP number has raised expectations that today?s non farms number will be equally as good given that the new methodology is supposed to make it more closely match the official (Bureau for Labour Statistics) BLS numbers.

With that in mind today?s release of the latest payrolls report for October could well be the piece of data that makes a difference as to who manages to get their hands on the keys to the White House in next week?s presidential election.

Last month saw the unemployment rate slip below 8% for the first time since Obama became President and while the number is largely symbolic, Democrats can point to the fact that the rate has been steadily falling for months now. Expectations are for an increase of 125k jobs, an increase from last month?s 114k, while the unemployment rate is expected to nudge up to 7.9% from 7.8%.

In any case, however good or bad number both President Obama and republican challenger Mitt Romney will be hoping that it provides the catalyst that pushes their campaigns into the final stretch and delivers the Presidency.

EURUSD ? despite yesterday?s rally to 1.2980, the lower highs keeps the downside bias intact.
Trend line resistance on the upside now comes in at 1.3085 from the 1.4940 highs.
The key supports remain at trend line support from the 1.2045 lows, at 1.2915, the 200 day MA at 1.2835 and the golden cross on the 50 and 200 day MA at 1.2880.
Only a move above 1.3240, targets 1.3495, the 50% retracement of the entire down move from 1.4940 to 1.2045.

GBPUSD ? yesterday?s move above 1.6150 ran out of steam at 1.6180 before sliding back with the possibility of a retest of 1.6300 and 1.6280 trend line resistance from the 2011 highs at 1.6750. Yesterday?s daily gravestone Doji could well signal a short term top and initiate a pullback towards 1.6050.
The main support lies at 1.5910, last weeks low, and 38.2% retracement of the 1.5270/1.6310 up move.

EURGBP ? having held above the 0.8000 support at the 55 day MA the single currency could well have another go at the 0.8070 highs seen earlier this week. Below 0.8000 targets 0.7975 trend line support from the 0.7755 lows.
A break above 0.8070 would retarget the 200 day MA at 0.8110.

USDJPY ? yesterday?s move and close above 80 is a start but we need to see a move above the June highs at 80.60 and a daily close above 80.00 to raise the prospect of a move towards 81.80 and the top of the weekly cloud.
Support comes in around the 200 day MA and the lows this week at 79.20 Only below 79.20 targets 78.50.

Equity market calls
FTSE100 is expected to open 6 points lower at 5,856
DAX is expected to open unchanged at 7,336
CAC40 is expected to open 3 points higher at 3,478

Quelle: http://www.cmcmarkets.com

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