Daily Market Report - 26/10/2015

CNY
In a surprise move on Friday the Chinese Central Bank cut its benchmark one-year lending rate by 25 basis points to 4.35 percent and lowered big banks' reserve requirement ratio by 50 basis points to 17.5 percent.
 
This move acted as a boost to equity markets and was seen as positive for the US Dollar, as the stimulus to the Chinese economy increases the probability of a US rate hike. Consequently, GBPUSD fell back, having pushed 7-week highs earlier in the week. 
 
EUR
Sterling hit a two-month high against the euro on Friday, as the single currency continued to struggle a day after ECB chief Mario Draghi told a news conference that the central bank was "open to the full menu of monetary policy".  The ECB comments had gone further than the market had expected by signalling that a deposit rate cut was possible, in addition to an extension of the quantitative easing program. 
 
However there was a set of stronger-than-expected data releases from the Eurozone early on Friday morning, including French services PMI, German services PMI and Eurozone manufacturing, services and composite PMI data, but none of which could abate the relentless pace of the euro’s slide following the much more influential ECB announcement. 
 
USD
The US dollar climbed following the release of the October preliminary Markit US Manufacturing PMI figure. The flash activity reading came in at 54, a higher reading than the 52.9 expected.  It was also a five-month high for the series with a marked contrast to some of the other manufacturing reports that have been released recently.

There were improvements in both output and new orders volumes during October. The orders component rose to 55.5 from 54.7 for the highest reading in seven months. The employment measure similarly accelerated. Additionally, input costs fell for the second month in a row.

Key Announcements
09:30 – GBP: BBA Mortgage Approvals for September expected to rise from last month’s print of 46.7k
14:00 – USD:New home sales for September expected to drop slightly to 0.550m from 0.552m