Markets Report - 24 October 2022

A daily breakdown of the markets for the 24th October 2022, provided to you by Sterlex.

🇪🇺💶The EUR/USD pair has recovered sharply to near the critical hurdle of 0.9900 in the early Asian session. That said, rising bets for another jumbo 75 bps rate increase by the European Central Bank act as a tailwind for the euro. Hence, the focus remains glued to this week's ECB monetary policy meeting. The shared currency's relative underperformance comes amid the protracted Russia-Ukraine war, which could lead to a deeper economic downturn in the Eurozone. The fears were further fueled by the rather unimpressive flash Eurozone PMI prints released this Monday. S&P Global reported that business activity in Germany's manufacturing sector continued to contract at a faster pace in early October. The asset has displayed a responsive buying action as the risk appetite of investors is extremely solid.

🇬🇧💷The economic activity in the UK's private sector continued to contract at an accelerating pace in early October with the S&P Global/CIPS Composite PMI dropping to 47.2 from 49.8 in September. Meanwhile, former chancellor Rishi Sunak has reportedly 165 supporters ahead of Monday's nomination deadline and remains the clear favourite to become the next PM. GBP/USD came under renewed bearish pressure with the initial reaction and turned flat on the day near 1.1300. The Manufacturing PMI declined to 45.8 from 48.4 and the Services PMI fell to 47.5 from 50 in the same period. Former British Prime Minister Boris Johnson announced that he ended his big to replace Liz Truss. Both of these prints fell short of analysts' estimates.

🇺🇸 🏦US Dollar Index (DXY) begins the week on firmer footing, after witnessing the first weekly loss in three, as buyers approach 112.00 during Monday’s Asian session. That said, the DXY dropped heavily on Friday while amplifying the first weekly negative in three as the hawkish Fed bets retreat after mixed Fedspeak. In doing so, the greenback’s gauge versus the six major currencies bounce off the lowest levels in two weeks, marked earlier in the day. Even so, Japan’s top currency diplomat Masato Kanda and Finance Minister Shunichi Suzuki resist confirming the intervention, as they did in the past, during their latest communications. Chatters surrounding Japan’s meddling in the market to defend the yen appeared to have triggered the DXY’s latest rebound.