The EUR/USD pair hovers around 1.0800, following Flash PMI figures. The HCOB Eurozone Composite PMI improved slightly to 49.7 in October, compared to the expected 49.7 and September's 49.6, marking a two-month high. Manufacturing PMI rose to 45.9 in October from 45.0 in September, while Services PMI slipped to 51.2 in October from 51.4 in September. On the dollar front, market sentiment around anticipated modest Federal Reserve (Fed) rate cuts and the upcoming US Presidential election on 5th November has strengthened the USD. Moreover, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East continue to fuel demand for the safe-haven Greenback. Today's economic data docket includes the German Ifo Business Climate Index, Durable Goods Orders, and the revised Michigan Consumer Sentiment Index. Apart from macroeconomic numbers, broader risk sentiment regarding geopolitical developments will drive price dynamics for the EUR/USD pair.

USD/CAD Slips Due to Stronger USD

The USD/CAD pair traded near 1.3800 after the Bank of Canada (BoC) delivered a widely expected 50 basis points interest rate cut. Uncertain geopolitical conditions, such as ongoing tensions in the Middle East and upcoming ceasefire talks regarding Gaza, could disrupt oil supply chains. This may lead to fluctuations in crude oil prices, potentially impacting the commodity-linked Canadian dollar (CAD). On the dollar front, October's Manufacturing PMI rose to 47.8 from August's 47.3, surpassing the expected 47.5, while Services PMI edged up to 55.3, exceeding the anticipated dip to 55.0. Canada's retail sales data, US durable goods orders, uncertainty about the upcoming US presidential election, and oil price dynamics will significantly influence the USD/CAD price trajectory.

GBP/USD Buoyed Despite Softer UK PMI Data

The Pound Sterling has recovered against the Greenback after Chancellor Rachel Reeves confirmed that she would change the government's fiscal rules to allow borrowing up to £50bn in the upcoming budget, increasing UK gilts yields. Despite MPC member Catherine Mann's comments from a panel discussion at International Monetary Fund (IMF) meetings, which hint at a hawkish stance, traders continue to bet that the BoE will reduce interest rates further in November.

Thursday's preliminary PMI report also suggested slower growth in manufacturing and services compared to previous months. On the other hand, positive economic data from the US, including flash PMI and unemployment claims, bolster expectations of a modest rate cut by the Fed. Without market-moving UK economic data, the US Durable Goods Orders and Michigan Consumer Sentiment Index could further shape market sentiment around the pound-to-US dollar exchange rate.

EUR/JPY Strengthens Ahead of Japan's General Election on Sunday

The EUR/JPY pair continues to climb around 164.52 amid political uncertainty ahead of Japan's general election on Sunday. A generally positive risk tone also undermines demand for the safe-haven JPY. However, a fall in Tokyo's core inflation rate below the Bank of Japan's (BoJ) 2% target tempers expectations of any further rate hike in 2024 and exerts some pressure on the JPY. In the Eurozone, flash Eurozone PMIs released on Thursday indicate that the economy stalled for a second consecutive month in October, with inflation slowing. This aligns with the ECB's view that disinflation is progressing as expected, supporting the likelihood of further policy easing, which may weaken the Euro. The EUR/JPY exchange rate will be shaped by broader market sentiment around Japan's general election.

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