US Manufacturing Contracts, According to IHS Markit

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The flash manufacturing data from the IHS Markit showed that manufacturing PMI contracted. This was the first contraction for the first time since 2009. The manufacturing PMI fell to 49.9 in August. This was below expectations of 50.5 and down from 50.4. The flash services PMI also fell to 50.9, down from 53.0 from the month before.

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Eurozone Flash PMI’s Fare Better than Expected

The flash PMI’s from IHS Markit for the eurozone came out better than expected. Manufacturing, services PMI advanced to 47.0 and 53.4 for the month of August. The jump in the PMI’s, though, did not see a much reaction from the euro currency. However, the bond markets reacted favorably with yields accelerating after the release of the report. The data comes after weeks of downbeat data.

EURUSD Turns Flat

The currency pair has been consolidating within the levels of 1.1100 and 1.1065 for the past few days. The range established comes after the bearish flag pattern emerged. A breakdown below 1.1065 is required for the euro to extend declines. The minimum downside target is at 1.1008. However, in the event of an upside breakout from the range, the bearish pattern could be invalidated.

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Sterling Jumps on Merkel’s Comments on Brexit

The pound sterling posted gains on Thursday. This came as the German chancellor, Angela Merkel said that the EU and the UK could reach a deal on the Irish backstop agreement before the Oct 30th deadline. However, the remarks were contradictory to the earlier statement where the EU said that the UK should find a solution within 30-days. The currency advanced on hopes that the UK could still manage a soft-Brexit.

Can the GBPUSD Sustain the Gains?

The gains in the cable come as expected, following the descending wedge pattern that was formed. The current gains could push GBPUSD towards at least the 1.2511 level. However, given that there is a strong hidden bearish divergence showing on the charts, there is a possibility for the currency to correct lower. The resistance level formed at 1.2170 will be likely tested as support ahead of further gains.

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Gold Prices Continue to Hold Steady

The precious metal was seen making no major gains or declines on Thursday. Prices held steady as investors shunned the Fed meeting minutes. The markets were largely unmoved. Meanwhile, equity markets managed to post some modest gains on the day but retreated back from the intraday highs.

XAUUSD Could Soon Break Out From the Range

The precious metal is expected to break out from the range established. Gold has been trading within the 1508 and 1485 levels. This comes near the top end of the rally. The consolidation comes within the larger ascending triangle pattern near the highs. Price action could potentially see a breakout from this level. The bias currently remains to the upside, unless prices breakdown below the 1485 handle.

Gold

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