GBP
The pound strengthened for a fourth successive day against the euro as data
showed manufacturing growth in the UK unexpectedly accelerated last month.
However it is not all good news as UK firms reported a drop in new export
orders, for the second straight month. Many UK firms reported a drop in demand
from the Eurozone; some also cited slower growth in other key markets, such as
the US and China.

GBP
The pound strengthened for a fourth successive day against the euro as data
showed manufacturing growth in the UK unexpectedly accelerated last month.
However it is not all good news as UK firms reported a drop in new export
orders, for the second straight month. Many UK firms reported a drop in demand
from the Eurozone; some also cited slower growth in other key markets, such as
the US and China.

EUR
Lots of manufacturing data from the Eurozone was released yesterday. France’s
factory sector has shrunk again, its manufacturing PMI coming in at 48.5 in
October. This shows a sharper contraction than in September when the PMI was
48.8, but did come in better than was forecast. Also bad news from Italy as its
factory sector has suffered a decline in activity, adding to fears that that
country is sliding back into recession. 

It’s better news in Germany, where factories reported a rise in activity last
month, and an increase in job creation, despite a small drop in new orders. The
German manufacturing PMI rose to 51.4 for October, up from September’s 49.9
(which showed a very slight contraction).

The overall Eurozone manufacturing PMI moved up slightly to 50.6 in October, up
from September’s 14-month low of 50.3. That does show a small increase in
activity, but not enough to pull Europe out of its malaise.
Greece’s government debt was also under pressure again yesterday, pushing the
yield on its 10-year bonds up to 8.2%, from 8.1% on Friday night. This is due
to uncertainty over Greece’s bailout plans and its political situation
continues to hit confidence.

USD
In October, the manufacturing sector slowed to its lowest rate of growth since
July, according to Markit, hit by a decline in exports as demand in the
Eurozone continues to fall and emerging markets slow down.  Markit’s US
manufacturing purchasing managers index fell to 55.9 from 57.5 in September, a
further decline from the preliminary reading of 56.2 on October 23.

Meanwhile the Institute of Supply Management has estimated that US
manufacturing rose more strongly than expected. Its index of national factory
activity rose to 59 in October from 56.6 in September, and better than the 56.2
expected by a Reuters poll of economists. This was due to a rebound in new
orders. That brought the index back to the level seen in September, which had
been the highest since March 2011.

Key
Announcements:
09:30- GBP: UK PMI Construction expected to fall to 63.5 from 
13:30- USD: US Trade Balance  (Sept) expected to fall
to -$40B from -40.1 
15:00- USD: US Factory Orders (Sept) (MoM) expected to come in
at -0.5% 

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