Majors tread water ahead of US PMI data

Here is what you need to know on Monday, November 1:

The greenback outperformed its rivals on the last trading day of October and the US Dollar Index (DXY) climbed to its highest level since mid-October. At the start of the new month, major currency pairs stay relatively quiet and the trading action is likely to remain subdued due to thin trading conditions. In the second half of the day, the ISM Manufacturing PMI for October will be featured in the US economic docket.

Wall Street: US House Democrats want to vote on President Joe Biden’s “Build Back Better” and infrastructure bills on Tuesday after adding the latest revisions to the $1.75 trillion bill on Sunday. US stock index futures register modest gains in the early European session. 

The benchmark 10-year US Treasury bond yield is moving sideways around 1.5% but investors remain focused on the flattening yield curve. Meanwhile, the 10-year German bond yield approaches the positive territory for the first time since May 2019.

Over the weekend, World leaders voiced their commitment to solving the global supply chains issues. “We have to take action now, together with our partners in the private sector, to reduce the backlogs that we’re facing,” Biden said at the G20 summit.

EUR/USD faced heavy bearish pressure in the second half of the day on Friday and erased all the gains it posted following the European Central Bank (ECB) meeting on Thursday. On Monday, the pair continues to move sideways around 1.1550 but stays dangerously close to the 2021-low it set at 1.1524 in early October.

GBP/USD is trading at its weakest level since mid-October around 1.3660 pressured by the renewed Brexit concerns and broad-based USD strength.

AUD/USD edges lower at the start of the week but stays afloat above 0.7500 for the time being. Earlier in the day, the data from China showed that the Caixin Manufacturing PMI improved modestly to 50.6 in October, surpassing the market expectation of 50.

USD/JPY shot above 114.00 on Friday and preserves its bullish momentum on Monday with the dollar strength providing a boost.

Gold failed to hold above $1,800 last week and staged a sharp U-turn on Friday. Currently, XAU/USD is moving sideways around $1,780.

Cryptocurrencies: After rebounding above $60,000, Bitcoin spent the weekend fluctuating in a relatively tight range with $62,000 area acting as near-term resistance. Ethereum staged a technical correction after renewing all-time highs but it doesn’t seem to be having a difficult time holding above $4,000.