Market movers today

In the US ISM non-manufacturing is due out. In the past couple of months the US service sector has begun to show weakness, pointing to weaker private consumption growth. We would not be surprised if ISM non-manufacturing has fallen further to 52, down from 52.6.

In the UK, focus remains on politics as the election campaign has started. We will also get the PMI service index for October today. Based on other soft indicators, we expect the index was broadly unchanged at 49.5.

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In the Scandi markets, today’s key event will be the Riksbank minutes from the October meeting amid its continued signal for a December hike. In Norway, October housing prices will be in focus.

Selected market news

Danish FX reserve data for October showed that Danmarks Nationalbank (DN) sold DKK0.4bn of FX reserves – the first FX intervention since January. EUR/DKK traded above 7.4700 and thus close to record-high levels during a large part of October, which prompted the action from DN. DKK0.4bn in FX intervention is a small amount, which shows that the upward pressure on EUR/DKK in October was limited. In comparison, DN sold off DKK14bn of FX reserves last December and January in FX intervention.

The Caixin Chinese service PMI index was 51.1 in October in line with the consensus expectation and slightly down from 51.3 last month. The composite PMI inched up to 52.0 in October from 51.9 in September. Hence, according to these data service activity in China is still deteriorating, while overall economic activity has started to pick up supported by a recovery in manufacturing activity. When we factor in a broader set of leading indicators for the Chinese economy we think there is scope for a moderate recovery in economic activity over the coming months. In the bigger picture, JP Morgan global manufacturing PMI rose to 49.8 from 49.7 in October – a small rise, but still the second consecutive month of gains.

The Reserve Bank of Australia (RBA) kept its key policy rate unchanged at 0.75% as it sees little change to the outlook for the economy since its last meeting. Hence, RBA still expects inflation to pick up gradually over the coming years. In related central bank news, People’s Bank of China provided a small dose of monetary easing as it cut the interest rate on 1Y loans by 5bp to 3.25%.

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