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EUR/USD Volatile After Employment, Manufacturing Reports

November 2, 2017 by

EUR/USD was volatile on Wednesday, sinking after the ADP employment report but bouncing after the confusing manufacturing data. While the Markit indicator of manufacturing rose, the ISM indicator declined. The meeting of the Federal Open Market Committee turned to be non-event as the FOMC did not change it policy, nor it said anything particularly interesting. It looks like markets were more interested in the tax reform, which was delayed for Thursday.

ADP employment grew by 235k in October, beating the median forecast of a 202k growth. Meanwhile, the already weak September reading was revised from 135k to 110k.

The final estimate of Markit manufacturing PMI showed a reading of 54.6 in October, up from 53.1 in September. It was about the same as the preliminary print and the average forecast of 54.5.

ISM manufacturing PMI, on the other hand, slipped from 60.8% in September to 58.7% in October, below market expectations of 59.5%.

Construction spending rose 0.3% in September from August, surprising analysts who were expecting a 0.1 drop. The previous month’s increase received a significant downward revision from 0.5% to just 0.1%.

Crude oil inventories decreased by 2.4 million barrels last week, though remained in the upper half of the average range for this time of year. That is compared to the predicted drop by 1.5 million and the previous week’s increase by 0.9 million. Total motor gasoline inventories slumped by 4.0 million barrels and were in the middle of the average range.

FOMC kept monetary policy unchanged at its October-November meeting, as was widely expected. While the Committee made some tweaks to wording of its statement, it said nothing that could make market participants to reassess their bets on a December interest rate hike.

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