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17 ноября, 16:32

Ruble Gains as Oil Falls: The Correlation is Reversed

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Yesterday, the ruble managed to keep resistance levels at 60.50 for USDRUB. During the day, the currency pair lost 0.9%, down to 59.68, as oil fell by 1.3% to $61.10 per barrel (Brent). This could be viewed as a clear sign of the Russian currency’s strength, as its movements occurred alongside a decline in oil price. The ruble was seen to decisively lose its dependence on the short-term dynamics of Crude. Essentially, what we saw yesterday was a repeat of the trend observed over the last few weeks, that is, the ruble and oil price moving in different directions. In November 2014, the correlation between USDRUB and oil was close to -0.85, reflecting the very close dynamics between the latter and the Russian currency. In November 2017, this correlation turned sharply positive, exceeding +0.93 last week and reaching +0.8 today. With the correlation reversed, the weakness in oil prices no longer translates into a weakening of the ruble. Rather, the ruble seems to be increasingly reliant on factors such as global risk appetite and Russian economy indicators. Yesterday’s sharp pullback could positively affect how traders perceive the Russian currency, seemingly having approved of the 60.50 level as a particularly strong resistance level. Bulls are also supported by positive global stock market dynamics that demonstrate growth in strong corporate reports. Thus, while the impact of oil prices on the ruble seems to have diminished, the factors that positively affected the Russian Currency on Thursday are likely to support the ruble during Friday trading as well.

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17 ноября, 10:16

USD Suffers on Subpoena News

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The Trump Administration is back in the spotlight with news of a report that Special counsel Robert Mueller’s investigators have issued a subpoena to more than 12 officials in the Trump administration election campaign for documents related to Russia. According to the Wall Street Journal; Mueller’s team issued the subpoena in mid-October, requesting documents and emails from more than a dozen campaign officials that include several keywords related to Russia. The subpoena does not compel testimony before a grand jury, but sources commented that Trump’s campaign was surprised by the order after voluntarily cooperating with previous requests from Mueller’s team. In fact, this is the first instance of Mueller ordering the Trump Administration to handover information. The news saw USD coming under pressure as Trump can ill-afford any more criticism of his leadership or, indeed, if Russia played a part in his election victory. The news about the subpoena overshadowed the first legislative triumph for President Donald Trump as Republicans pushed a $1.5 trillion tax overhaul through the House on Thursday. But obstacles remain in the Senate, which is refining its own version of the legislation amid objections from key GOP senators. The bill passed 227 vs 205, with 13 Republicans voting against the bill and no Democrats voting for it. Trump called the vote “a big step toward fulfilling our promise to deliver historic tax cuts for the American people by the end of the year.” EURUSD is 0.35% higher in early Friday trading at around 1.1808. USDJPY is 0.5% lower, currently trading around 112.52. GBPUSD is 0.3% higher in early session trading at around 1.3230. Gold is 0.33% higher, currently trading around $1,283. WTI is little changed overnight, currently trading around $55.48. Major data releases for today: At 08:30 GMT, ECB President Mario Draghi is scheduled to deliver a Keynote speech at the Frankfurt European Banking Congress “Europe into a New Era – How to Seize the Opportunities” in Frankfurt, Germany. At 13:30 GMT, the US Census Bureau, at the Department of Commerce, will release several sets of data: Building Permits and Housing Starts (MoM) for October along with both Building Permits and Housing Starts Change for October. With the data sets all expected to post higher releases, this could result in USD buying. If the data is below expectations we can expect to see USD selling. At 13:30 GMT, Statistics Canada will release CPI Core and CPI (MoM) for October along with CPI (YoY) for the same period. The annualized rate is forecast to come in at 1.4%, a decrease from the previous release of 1.6%. If the release is substantially different from forecast the markets will experience CAD volatility.

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16 ноября, 10:21

Positive US Data Negated by Tax Plan Opposition

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The US Labor Department released data on Wednesday showing the consumer price index edged up by 0.1% in October after climbing by 0.5% in September. The modest increase in consumer prices was in line with market expectations. CPI excluding food and energy prices climbed by 0.2% in October after inching up by 0.1% in the previous month – as expected by the markets. The US Commerce Department released data showing that US retail sales rose by 0.2% in October after spiking by an upwardly revised 1.9% in September. This slight increase beat market expectations and gives more justification for the Fed to hike rates in December as the markets are >90% expecting. Such data should have boosted USD but that was countered on news that the Senate Republican tax plan received opposition from two Republican lawmakers, a possible warning sign for the plan. This is more damning as the Republican party can’t lose more than 2 votes from their ranks for the reform proposal to pass. Data, on Wednesday, from the UK Office of National Statistics (ONS) showed UK unemployment holding at 4.3%, unchanged in the last 3 months and at its lowest rate for 42 years. The ONS also released average earnings data that, year-on-year, climbed to 2.2%. Whilst average earnings are rising, the gap to UK inflation is concerning for monetary policymakers. Currently, UK inflation is running at an annualized rate of 3% which means that real average earnings, adjusted for inflation, have dropped 0.4% from a year ago. The Bank of England Monetary Policy committee will need to digest the current, and future data, before making any change in monetary policy. The Japanese Ministry of Economy, Trade and Industry released data showing Japan’s industrial production declined less than forecast in September. Industrial production dropped to a seasonally adjusted monthly 1% in September, beating the 1.1% decrease reported earlier. This was followed by a 2% rise in August. EURUSD is 0.1% lower in early Thursday trading at around 1.1778. USDJPY is 0.2% higher in early session trading at around 113.10. GBPUSD is little changed in early trading at around 1.3172. Gold in unchanged overnight, currently trading around $1,277. WTI is 0.15% higher in early trading at around $55.56. Major data releases for today: At 09:30 GMT, UK National Statistics will release Retail Sales (MoM & YoY) for October. Month on Month data is forecast to come in at 0.1%, an improvement on the previous release of -0.8%. Year on Year data is forecast at -0.6% a significant drop from the previous release of 1.2%. The markets will likely see GBP volatility on the data release. At 10:00 GMT, Eurostat will release CPI and CPI Core (YoY) data for October. CPI is expected unchanged at 1.4% with Core CPI forecast at 0.9%, lower than the previous release of 1.1%. Expect EUR volatility if the actual release is significantly different from the forecast. At 13:30 GMT, the US Department of Labor will release Initial Jobless Claims for the week ending …

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15 ноября, 13:19

Ruble Suffers Biggest Drop in More Than a Year

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The Russian ruble seems to have run out of luck. Yesterday, the currency lost 1.5% against the dollar and 2.5% against the euro, with this drop coming in as a result of several negative factors. The API reported an increase in oil inventories, which may be confirmed later in the day in the official report. This added pressure on oil quotes, as investors focused on the issue of oversupply amid sustaining high oil inventories. The markets seem set to register profits in assets that have previously rallied. Commodities and stocks are under pressure as a result of speculation that, over the past few months, they have gained too much too fast. This has had an impact on the ruble, contributing to its sharp drop. The ruble had shown signs of weakness early last month, with positions abandoned despite the growth in oil quotes. This in relation to a currency that is traditionally weak around this time of the year due to payments on external debt and more active budgetary expenditures. The increase in purchases of foreign currency to the reserve fund by the Russian Ministry of Finance has had further negative impact. The ruble is expected to remain under pressure as the factors that affect it will most likely continue to do so for the foreseeable future. Oil corrections and risk aversion in the global markets could potentially cause the ruble to fall even further in the coming days and weeks. EURRUB reached 71, heading for the highs of August around 72, while USDRUB surpassed 60, now on its way to the extremes of July and August at 61. A move beyond these levels could signal an even bigger drop for the currency, in the regions of 75 and 64 for the currency pairs respectively.

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15 ноября, 10:27

Data Boosts EUR Can CPI Boost USD?

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EUR received a boost on Tuesday, as data from Destatis showed German Preliminary GDP climbed to 0.8% in Q3, beating forecasts of 0.6%. In addition, Q1 growth was adjusted higher to 0.9% from the previous 0.7%. The recent increase in exports and business investment appears to be the main driver behind the improvement, as consumer and government spending were stable through the quarter. Germany’s economy is now growing at an annualized rate of 2.8% the best growth the country has seen for 6 years. Whilst the economy is growing there is very little inflationary pressure as German inflation is well below target. With the German economy doing well, the markets expect this growth to precipitate to other member states and, as a result, EUR climbed over 1% on Tuesday. The upward momentum has carried through overnight with EURUSD touching 1.18 in early trading. Data from the US on Tuesday indicated producer prices rose 0.4% last month, which beat expectations. The data helped boost PPI to 2.8% in the 12 months up to October, for the largest yearly increase in wholesale inflation in nearly 6 years. The markets will now be focusing on US consumer inflation data later today. Forecasts are calling for a slight increase. The current CME Group’s FedWatch tool puts the probability of a December rate hike of a quarter point at 91.5%. If, however, today’s data is weak, that may reduce the probability of a December rate hike by the Fed. EURUSD is currently trading around 1.1795. USDJPY is 0.25% lower in early Wednesday trading, at around 113.15. GBPUSD is 0.2% lower in early session trading, at around 1.3140. Gold is little changed overnight, currently trading around $1,281.25. WTI is slightly higher, currently trading around $55.28. Major data releases for today: At 09:30 GMT, UK National Statistics will release Average Earnings (including and excluding Bonus) for the previous 3 months and current year to September. Both data sets are expected to come in at 2.1%, a slight fall from the previous reading of 2.2%. With inflation outpacing earnings in the UK, the markets will be interested to see if the gap can be closed that will determine future monetary policy decisions. At 13:30 GMT, the US Census Bureau will release Retail Sales (MoM) for October. Retail Sales are forecast to come in at 0.0%, a significant decline from the previous reading of 1.6%. If consumer spending has zero growth, the markets will expect to see a lower CPI reading that will be released at the same time. At 13:30 GMT, the US Census Bureau will release a plethora of data related to CPI, with the main focus being on CPI & CPI excluding Food & Energy (YoY) for October. CPI is forecast to come in lower at 2.0% from the previous release of 2.2%. CPI excluding food & energy is forecast to be unchanged at 1.7%. Any significant deviation from the forecast will likely cause USD volatility. At 15:30, the US Energy Information Administration will release Crude …

14 ноября, 10:19

Chinese Data Disappoints

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China’s economy has been robust throughout 2017 as a continued recovery in manufacturing and industrial sectors, a healthy property market and surprisingly strong exports have helped push growth in the first three quarters close to 6.9%. However, data on Tuesday from the Chinese National Bureau of Statistics showing fixed-asset investment growth declined to 7.3%, through January to October, below forecasts of a 7.4% growth. Further disappointing data showed year-on-year industrial output coming in at 6.2% in October and significantly lower than September’s strong release of 6.6%. Many believe this contraction in growth is likely to continue in the coming months, albeit at a very moderate pace, as China looks to limit the risk of debt, which slows demand, and its push to improve pollution that has negatively impacted factory output. Consumer data is also showing signs of waning as Retail Sales (YoY) for October came in at 10%, missing forecasts of 10.4% and below the previous months reading of 10.3%. With President Xi Jinping stating that “China will focus on quality over speed as it pursues economic growth” and restating the need to improve pollution and reduce riskier lending, it is likely that China will struggle to move towards a more domestic demand driven economy. The markets are now focused on today’s gathering of several central bankers in Frankfurt, Germany, who are taking part in an ECB organized event. The central bankers, including the Fed’s Janet Yellen, the BoE’s Mark Carney, the ECB’s Mario Draghi and the BoJ’s Haruhiko Kuroda, will participate in a panel titled: “At the heart of policy: challenges and opportunities of central bank communication”. Needless to say, the markets will be keenly listening to any hints on future monetary policy that could cause market volatility. EURUSD is slightly higher in early Tuesday trading at around 1.1672. USDJPY is little changed, trading at around 113.65. GBPUSD is unchanged overnight, currently trading around 1.3115. Gold is 0.15% lower in the early trading session at around $1,276.50. WTI is 0.15% lower in early Tuesday trading at around $56.82. Major data releases for today: At 07:00 GMT, the Statistical Office of the European Union, Destatis, will release the Harmonized Index of Consumer Prices (YoY) for October. The statistical methodology results in an index of Consumer Prices correlated across all EU member states to define and assess price stability. Consensus is calling for an unchanged reading of 1.5% – any significant deviation from the forecast could see EUR volatility. At 08:05 GMT, the CEO of the Federal Reserve Bank of Chicago and current FOMC member Charles Evans is scheduled to speak at the European Central Bank Conference in Frankfurt, Germany on the topic of “Communications Challenges for Policy Effectiveness, Accountability and Reputation”. At 9:00 GMT, Sabine Lautenschläger, a member of the European Central Bank’s Executive Board, is scheduled to speak at the opening discussion at the Banking Supervision, Resolution and Risk Management Conference during 20th Euro Finance Week in Frankfurt, Germany. At 9:30 GMT, UK National Statistics will release Consumer Price …

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09 ноября, 18:45

SegWit2x HardFork suspended, Bitcoin surges to $7999 before crashing by more than $1,000

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As of November 9, Bitcoin is trading above $7,100. Once theSegWit2x fork was suspended, the price of Bitcoin surged to $7,999 on cryptocurrency exchange Bitfinex, before losing more than $1,000 in a matter of minutes. It is worth noting that the recent rally was supported by altcoin sell-off as traders exchanged them with Bitcoin, hoping for “free coins” after the hardfork. Meanwhile, markets seemed to have too high hopes about getting something for free as developers wanted to implement only technical updates and said nothing about a new cryptocurrency. It looks like someone wanted to see Bitcoin reach even higher highs than the ones of a week ago. On the one hand, the hardfork was meant to solve a problem with mining difficulty levels for Bitcoin Cash. On the other, though, SegWit2x’s opponents declared that its developers did not implement replay protection, asking the community to oppose the new fork. SegWit2x was also supposed to support original blockchain, 2x chain and new Bitcoin based on the PoW (Proof-of-work). Over the past few weeks, Bitcoin Cash has attracted a solid demand worldwide. BCH registered an increase of 89%, up from $336 to $635, trading at around $624.41 at the time of writing. Many investors stood to receive the same amount of coins following the fork, yet this time it seems they were unlucky. Naturally, Bitcoin Cash price shortly fell to $594, now recovering at $624.41. When the cryptocurrency market calms down, Bitcoin Cash is expected to decline, Bitcoin to stabilise and altcoin demand to return.

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09 ноября, 10:22

Kiwi Gets a Boost

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Earlier today the Reserve Bank of New Zealand (RBNZ) left their Official Cash Rate (OCR) unchanged at a record low of 1.75% – as the markets had forecast. More importantly was the RBNZ revising inflation forecasts upwards, which is likely to signal an increase in interest rates earlier than previously predicted. RBNZ acting Governor Spencer stated after the announcement “Monetary policy will remain accommodative for a considerable period,” & “the exchange rate has eased since the August statement and, if sustained, will increase tradables inflation and promote more balanced growth.” The RBNZ had set an inflation target of between 1% and 3% and now expects inflation to reach 2% in Q2 of 2018, a full 3 quarters earlier than previously expected. Because of inflationary pressure, the markets are forecasting a rate hike by the end of next year. Following the announcement, NZDUSD rose from around 0.6922 to just above 0.6970. NZDUSD has suffered in the second half of this year, after reaching a high in July of around 0.7550 the Kiwi slumped to lows around 0.6830 earlier this month. Today’s announcement gives a much needed “boost” to the Kiwi. Wednesday’s EIA report surprised the markets with an unexpected increase of oil inventories. The markets had been expecting another drawdown around -2.8M that continues a trend seen over the past few releases. For the week ending November 3rd US Crude Oil inventories rose 2.2M as supplies increased, while production jumped to a record all-time high. The major focus is the fact that US production increased 67,000 bpd to 9.62 Million bpd – the highest since data was readily available in 1983. The increase in US production can only undermine OPEC’s supply cuts to boost the price of crude. EURUSD is unchanged in early Thursday trading at around 1.1600. USDJPY is -0.25% lower, currently trading around 113.55. GBPUSD is 0.15% higher in early trading at around 1.3135. NZDUSD is currently trading around 0.6960. Gold is 0.30% higher, currently trading around $1,285. WTI is currently trading -0.20% lower at around $56.95. Major data releases for today: At 09:00 GMT, the European Central Bank launches a new publication, the Economic Bulletin, to replace the ECB Monthly Bulletin. It will be published two weeks after each Governing Council meeting. At 10:00 GMT, the European Commission will release Economic Growth forecasts as compiled by the Directorate General for Economic and Financial Affairs (DG ECFIN). At 13:30 GMT, the US Department of Labour will release Initial Jobless Claims for the week ended November 3rd and Continuing Claims for the period ended October 27th. The previous release of Initial Claims of 229K is expected to be bettered, with forecasts calling for a release of 232K. Continuing Claims are expected to come in at 1885K, a minor increase on the previous release of 1884K. Any significant deviation from forecast will see USD volatility. At 15:00 GMT, the UK National Institute of Economic and Social Research will release an estimate of UK GDP. This release occurs 1 month before the …

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08 ноября, 10:11

Data & Polls Pressure Sterling

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Sterling suffered downward pressure on Tuesday as the latest monthly report from the British Retail Consortium showed non-food sales slumping in October to the lowest levels in 5 years. Total sales crept up 0.2% from a year earlier, like-for-like sales slipped 1%, a reversal from the 1.9% rise in September. British consumers continue to experience a squeeze on their incomes as wage growth is behind inflation, driven by the continued weakness in GBP following the Brexit vote in 2016. More pressure was added on GBP following the release of a poll, conducted by ORB International for The Telegraph, that showed public confidence in Prime Minister May’s ability to deliver a strong Brexit had fallen to a record low. 66% of those polled disapprove of the way the Government is handling negotiations with the EU. Prior to the snap election in June, the percentage of disapprovers stood at 45%. The poll also suggested that public confidence in Prime Minister May has fallen sharply with only 26% believing she will “get the right deal for Britain in the Brexit negotiations” – in June this stood at 44%. With several key members of the Conservative Party suffering suspensions, due to sexual harassment allegations, and Foreign Secretary Boris Johnson damaging international relations following his recent remarks concerning the imprisonment of a British dual national in Iran, many are wondering if Theresa May’s tenure as Prime Minister may be near its end. In the US, reports are circulating that Senate Republican leaders are considering a 1-year delay in the implementation of a major corporate tax cut to comply with Senate rules. USD had seen a recent improvement against its peers on expectations that President Trump’s Administration would deliver on their pledge to reduce taxes, which would help economic growth and lift interest rates. With the prospect of delays, USD will lose much of its appeal and could give back its recent gains. EURUSD is 0.12% lower in early Wednesday trading at around 1.1600. USDJPY is 0.2% lower in early session trading at around 113.75. GBPUSD is little unchanged in early trading at around 1.3172. Gold is 0.25% higher, trading around $1,278.50. WTI is little changed overnight, currently trading around $57.15. Major data releases for today: At 08:00 GMT, the European Central Bank is scheduled to hold a non-monetary policy meeting in Frankfurt, Germany. At 13:15 GMT, the Canadian Mortgage and Housing Corporation will release Housing Starts (YoY) for October. The forecast is calling for 210K new homes constructed against the previous release of 217.1K. We can expect to see CAD volatility if the release is significantly different from expectations. At 15:30, The US Energy Information Administration will release Crude Oil Stocks change for the week ended November 3rd. The forecast is for another draw of -2.8M compared to the previous draw of -2.435M. The EIA report never fails to cause volatility in both WTI and Brent, especially if the release is wildly different from expectations.

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07 ноября, 10:18

Eurozone to Close the Year on a Strong Note

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Data released on Monday indicates that the Eurozone economy is on target to close out 2017 strongly. The latest Markit composite PMI fell to 56.0 in October, slightly lower than the previous months reading of 56.7, but well above the key 50 zone indicating positive sentiment for growth. PMI data showed the 2 largest economies, Germany and France, have remained strong. Not all PMI data was positive, as Italian growth slowed and Spain saw its mainstay services sector falling to its lowest level in 9 months. The decline in sentiment in Spain is not surprising given the political crisis that has developed following the Catalonian referendum, with many businesses concerned for their future. An investor sentiment index, released by Sentix, indicated that sentiment has grown to a level not seen in over 10 years – all attributed to a growing economy. With robust economic growth, which is likely to create upward inflationary pressure, the ECB’s recent decision to finally scale back Quantitative Easing can only help in accelerating Eurozone growth. Earlier this morning, the Reserve Bank of Australia left interest rates unchanged (as expected) at 1.5%, for the 15th month in a row. RBA Governor Philip Lowe said the board expects the current low inflation rate to gradually lift as economic growth improves, stating; “Inflation remains low, with both CPI and underlying inflation running a little below 2%”. The markets are now looking ahead to the RBA’s latest quarterly outlook report (the November Statement on Monetary Policy), due on Friday, which might prove to be more insightful about future policy than today’s interest rate decision. The report is not expected to have changes for growth and inflation forecasts. However, AUD could see volatility if there are any significant changes to the inflation picture, specifically if the report indicates any possible delays to the timing of a rate hike. EURUSD is unchanged in early Tuesday trading at around 1.1608. USDJPY is 0.25% higher to currently trade around 114.00. GBPUSD is little changed overnight, currently trading around 1.3170. Gold is 0.2% lower in early session trading at around $1,279.50. WTI is 0.16% higher, trading at around $57.50. Major data releases for today: At 15:00 GMT, the UK National Institute of Economic and Social Research will release a 3-month estimate for UK GDP (August to October). The report is released 1 month ahead of the official GDP report and has been known to be highly accurate. At 19:00 GMT, Bank of Canada Governor Stephen Poloz will be speaking before the CFA Montreal and the Montreal Council on Foreign Relations on the topic of Central banks’ ability to understand inflation. Any hints to future Canadian Monetary Policy will see volatility in CAD.

06 ноября, 10:13

Trump: “JOBS, JOBS, JOBS!”

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Data released on Friday showed US job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in average earnings and an increase in the number of people leaving the workforce caused concern on the robustness of the labor market. Nonfarm payrolls increased by 261K in October as 106K leisure and hospitality workers returned to work. This was the largest gain since July 2016 but below forecasts of an increase of 310K. The data for September was revised to show a gain of 18K jobs instead of the previously reported decline of 33K. Average hourly earnings disappointed the markets, falling by 1%. The reduction results in the year-on-year increase dropping to 2.4%, the smallest since February 2016. In September earnings increased 0.5% lifting the annual increase in that month to 2.9%. Whilst the data was below forecasts, the job growth underscored the recent Fed statement that “the labor market has continued to strengthen” and has done little to change expectations of a rate hike in December. More upbeat data came in the form of the unemployment rate at 4.1%, a rate not seen in 17 years. President Trump tweeted after the data release “JOBS, JOBS, JOBS!” There was more “up-beat” jobs news on Friday, with Statistics Canada releasing data that showed the Canadian economy added 35,300 jobs in October, as the number of full-time positions swelled by 88,700, while part-time employment dropped by 53,400 jobs. The increase in jobs came as the unemployment rate increased to 6.3%, up from 6.2% in September, as more young people started looking for work. The positive news was short-lived as Statistics Canada also reported a $3.2-billion trade deficit for September compared with an initial estimate of $3.4 billion. The deficit was caused as both exports and imports dropped 0.3% – which signals demand is slowing – as many had anticipated for H2 after the stellar H1 performance. EURUSD is little changed from Friday’s close. Currently, EURUSD is trading around 1.1612. USDJPY is at 3+ month highs in early Monday trading at around 114.30. GBPUSD is little changed in early Monday trading at around 1.3072. Gold is currently trading around $1,270. WTI is 0.5% lower in early session trading at around $55.90. Major data releases for today: At 08:15 GMT, Markit Economics will release Spanish Services PMI for October. Whilst not normally an impactful data release, the markets will be keen to see what impact the Catalan Independence vote has had on business sentiment in Spain. The forecast is for 55.5 down from September’s release of 56.7. A release wildly away from consensus could see EUR volatility. At 08:55 GMT, Markit Economics will release German Services and Composite PMI for October. As the largest economy in the Eurozone, the markets will be looking for any indications that German business executives are still confident in the economy. Both releases are expected to come in unchanged with Services PMI at 55.2 and Composite PMI at 56.9. We can expect EUR volatility if …