USD slips lower despite solid ISM; UK service sector growth slows

Summary:

• USD dips a little lower despite ISM beat

• UK service sector growth slows

• US500 little changed but remains below 200 day SMA

• DE30: Volkswagen to team up with Ford motors?

• Blackrock will not launch Crypto ETF

After coming in at its highest level since 1997 last time out, there was plenty of scope for disappointment for the release that followed, but while the ISM non manufacturing PMI dipped back it still topped consensus forecasts. The reading of 60.3 for October was above the 59.3 expected and not that far below the 61.6 2-decade high in September. The final services PMI rose last month and the large divergence seen of late seems to be closing, at least partially. The US dollar is coming back under pressure a bit today after Friday’s gains. The Turkish Lira is the biggest winner and higher by more than 1%, but most the G10 currencies are only make small gains against the Buck.  

The latest read on the service sector has come in on the soft side with the PMI reading for October missing forecasts. A print of 52.2 is the 2nd lowest of the year and the worse reading back in March is the only release lower that today’s since August 2016. While there was a moderate rise in business activity during the month, new work increased at its slowest pace since July 2016 and it is pretty clear to see that the continued uncertainty surrounding Brexit as the Article 50 deadline approaches is weighing ever more heavily.

Last week was a good one for US investors, with markets recovering after some heavy recent selling. After falling to a 7-month low last Monday the S&P500 (US500 on xStation) put together 3 consecutive daily gains of 1% or greater. This had only happened three since 2010, each time at a market low in 2011, February 2016 and June 2016. Furthermore the market has held above a rising trendline going back over 2 and a half years and bounced more than 150 points after buyers defended the key level around 2600. The rally did pause on Friday however, with a red close and the high of the day at 2766 may now take on a greater significance. This region also coincides with the 200 day SMA, and traders looking for longs would like to see the market get back above this in the not too distant future.   

In Europe the DE30.cash has drifted a little lower on the day, although the market is still holding above the 11445-11500 region. Herbert Diess, CEO of Volkswagen (VOW.DE), is said to present the 10-year plan on 16 November. According to Reuters report, the company will seek to reduce research costs by teaming up with Ford Motors (F.US) in electric and autonomous vehicle development process. However, Volkswagen spokesman declined to comment on the news.

BlackRock, one of the world’s biggest asset managers, is not keen on launching cryptocurrency ETFs. Larry Fink, CEO of BlackRock, said that the company will not take a step into the cryptocurrency market unless the industry becomes “legitimate”. Potential for scams, money laundering and tax evasion resulting from the decentralization and high degree of anonymity were named as major hurdles towards launching passive cryptocurrency investment vehicles. However, Fink said that he thinks the cryptocurrency sector will be ultimately regulated by governments as authorities would like to have insight into where the money is going.