Euro Stuck In Range On Greece Stalemate

Markets are generally stuck in range as US equities failed to maintain initial gain and ended flat. Asian stocks opened lower but was then lifted by manufacturing data, which in turn triggered some selling in the Japanese yen. Nonetheless, there is no decisive moves in the FX markets yet. Euro also fails to extend gain against dollar as there is no greenlight for release of the next tranche of bailout fund for Greece yet. Instead, after a conference call, Eurogroup of finance ministers issued a statement urging "Greek authorities to solve remaining issues so as to swiftly finalize the negotiations with the troika institutions". And, the officials emphasized that release of the next round of money "was subject to the completion of prior actions by the Greek authorities". German finance minister Schaeuble said that "there are a lot of difficult issues that still need to be resolved: and the next report by troika wouldn't be ready before November 11.

The official Chinese PMI manufacturing index rose to 50.2 in October. That's the first expansionary reading in three months and affirm the views that China is bottoming out. Analysts noted continued improvement in sub-indexes including new orders, export orders, quantity of purchases that added to sign of improvements in the economy. Also, some pointed out that the impact of prior policy easing could have been stronger than originally expected and the economic might pick up further momentum in Q4. Nonetheless, new export orders remains in contractionary region which indicates continued external weakness which would drag down recovery. And, continuation of policy easing is generally expected among analysts to counter this. Meanwhile, the final reading of the HSBC PMI manufacturing was also revised up to 49.5.

Yesterday SNB said in its quarterly report that it lowered its Euro reserves to 48% at the end of September. That's a significant drop comparing to 60% at the end of June. Holdings of US Dollar, British Pound, Japanese Yen and Canadian Dollar were increased during the period. SNB spokesman Walter Meier said that the drop in Euro reserves "reflect a rebalancing, which brought them down to our desired long-term level of around 50%". Meanwhile SNB also said it had CHF 16.9b profits for the nine months through September with CHF 94m gain from Franc positions and CHF 6.2b gain in gold assets.

Looking ahead, Swiss retail sales and SVME PMI will be released in Eurozone session but the main focus is on UK PMI manufacturing which is expected to drop from 48.4 to 48.0 in October. Employment data will be a major focus in early US session with Challenger report, ADP private employment featured. The ADP report is expected to show 137.5k growth in October. Jobless claims will also be release and is expected to be steady at 370k. Then, ISM and Consumer confidence will take attentions.