Two of the leading Markit PMIs for the U.K.; manufacturing and construction, came in significantly below expectations earlier in the week, therefore on Wednesday analysts and GBP investors, were looking for a rise in both the services and composite readings, to restore some faith that the recently proposed base rate rise, which the BoE governor Mark Carney committed to, would happen in November. Services PMI came in at 53.6, just ahead of the prediction of 53.2. The reading was sufficient to cause sterling to rise moderately versus several of its main peers. One other notable U.K. data release concerned the UK’s assets; falling from £1603m, to £544m in September. Several PMIs for individual Eurozone countries were published on Wednesday, most missed the forecasts, but are considered to be low impact. Retail sales for the Eurozone found reverse gear for August, coming in down -0.5% MoM and falling to 1.2% growth YoY, a significant miss from the forecast of 2.6% annualised growth. Neither the poor PMI readings, nor the contracted retail sales figures, impacted on the value of the euro, which closed the day out up, versus many of its major peers.
NFP day is due on Friday, analysts have revised up their forecasts, from the 50k predicted last week, to 80-90k this week, depending on whether Bloomberg, or Reuters is quoted. Despite this revision, it’s still a massive fall versus the average 2017 monthly job creation number, of circa 240k. A sentinel for the NFP data, is the ADP jobs roll number, always published the same week as the NFP data, it came in right on forecast at 135k on Wednesday, significantly below the 228k registered for August, which missed the forecast. The conclusion could be drawn that the NFP forecast will be proven to be accurate, as such the effect on the value of the U.S. dollar could be severe, as this would represent the lowest jobs number recorded since June 2016.
In other high impact USA calendar news, the ISM non-manufacturing reading was published on Wednesday, which beat the forecast by some distance, coming in at 59.8, versus the expectation of 55.5, helping keep the key USA equity indices at their current record high altitude. In political news, not concerning a Trump tweet or a threat to North Korea, the U.S. dollar slipped from its seven week high, due to speculation that Trump’s choice for the next head of the Federal Reserve, after Mrs Yellen’s tenure expires in February, might be a less hawkish candidate than previously suggested; Fed Governor Jerome Powell is apparently favoured over former governor Kevin Warsh by the U.S. Treasury Secretary Steven Mnuchin.
U.S. DOLLAR
The dollar index fell for the second day in series; by approx 0.1%. EUR/USD was up circa 0.2% on the day to 1.1764, having at one stage during the morning European session, breached R1 and set a daily high of 1.1788. GBP/USD whipsawed throughout the day, breaching R1 twice and retracing, to finish the day at circa 1.3254, resting on the daily pivot point, USD/CHF was also close to flat on the day, on the daily pivot point. USD/CAD fell through to S2, before recovering to end the day down circa 0.2%, at 1.2474. USD/JPY also whipsawed throughout the day in a fairly tight range, falling through S2 on the day, before recovering to end the day down approx. 0.2% at 112.70.
EURO
The ongoing Catalonia secession issue hasn’t impacted on the value of the euro as badly as originally anticipated, although Spain’s main IBEX index sold off sharply, down 2.85% on the day. The euro experienced mixed fortunes versus its major peers during Wednesday’s sessions, versus USD, CHF and GBP the single bloc currency made gains; EUR/CHF closing the day out up circa 0.5% at 1.1466, having breached R2, to reach a high of 1.1483. EUR/GBP has recovered significantly since its recent low was posted on September 27th, ending the day at approx. 0.8873, up circa 0.3%. The euro posted a loss versus the Aussie dollar; EUR/AUD ending the day down 0.3% on S1, at 1.4672.
STERLING
GBP/CHF ended the day up circa 0.2% at 1.2921, GBP/AUD fell to S1 at approx. 1.6860. Similar to the other major currencies, sterling not only fell versus the Aussie which experienced a positive day’s trading, it also initially fell versus yen, GBP/JPY reached S1, to then recover, gaining circa 0.2% to 149.42.
INDICES AND COMMODITIES SNAPSHOT
• DJIA closed up 0.09%.
• SPX closed up 0.12%.
• FTSE 100 closed down 0.01%.
• DAX closed up 0.53%.
• CAC closed down 0.08%.
• IBEX closed down 2.85%.
• ASX 200 closed down 0.87%.
• Gold was up circa 0.3% at 1274.
• WTI oil fell by circa 1% to 50.09.
KEY ECONOMIC CALENDAR EVENTS FOR OCTOBER 5th
• CHF Consumer Price Index (YoY) (SEP).
• EUR Markit Germany Construction PMI (SEP).
• USD Challenger Job Cuts (YoY) (SEP).
• EUR ECB account of the monetary policy meeting.
• USD Initial Jobless Claims (SEP 30).
• USD Trade Balance (AUG).
• USD Factory Orders (AUG).
• USD Durable Goods Orders (AUG F).
