Forex Weekly Round Up 2 November 2015 – 6 November 2015

Manufacturing activity released on Tuesday in the US showed the activity improved to six-month high on the back of a faster rise in output, new orders and employment levels. The final seasonally adjusted Markit US Manufacturing Purchasing Managers’ Index (PMI) printed at 54.1 in October; up from 53.1 in September.

The euro fell to its lowest level in three months on Wednesday as a strong reading on service-sector growth and dovish comments from Federal Reserve Chairwoman Janet Yellen helped support the dollar against its rivals. Mario Draghi defended the central bank’s willingness to expand its program of monetary easing.

Wednesday also brought news that the UK service sector activity expanded at a faster rate than expected in October. This boosted optimism over the health of the economy has supported the case for a hike in interest rates. Markit said the seasonally adjusted Services Purchasing Managers Index increased to 54.9 last month from a reading of 53.3 in September. It was expected to rise to 54.5 in October.

On Thursday Bank of England (BoE) governor Mark Carney pushed sterling off a cliff by suggesting that interest rates could stay anchored to their historic low until 2017, causing significant losses against a basket of currencies.

Having said earlier in the year that a rate hike could come towards the end of 2015 or start of 2016, his comments, dubbed super Thursday, were surprisingly dovish. Reports indicate that until the UK’s headline inflationary figure shows any meaningful pickup they won’t be rushed into implementing policy too soon.

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