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Euro Slumps and US Dollar Continues its Positive Trend

2nd October 2018 Market Update

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?? GBP – Sterling has started the week on the front foot after UK manufacturing data beat expectations to rise to 53.8 in September. Growth in the sector has been credited due to a solid increase in new orders in both domestic and international markets as well as an increase in jobs.

Later in the afternoon sterling got another boost after a senior government official revealed that the Premier was preparing a significant new Brexit offer to the EU with a compromise on the Irish border issue. However, the gains on the Pound proved to be short lived as we come into this morning’s trade with the currency lower against the Dollar and slightly off yesterday’s highs against the Euro.

Today will see the release of construction PMI’s expected to show a slight slowdown to 52.5 which won’t do the Pound any favours this morning should this be the case.

?? EUR – The Euro slumped yesterday after the head of Italy’s lower house budget committee stated that the nation would have solved its fiscal problems with its own currency. Fears surrounding the populist Italian government fiscal plans overshadowed the fall in the unemployment rate to 8.1% which is now at a decade low.

The Euro has continued to fall against the US dollar this morning too with the single bloc currency now at a one month low against the greenback. No significant news today.

?? USD – Amid the risk aversion mood of the markets yesterday, the US Dollar benefited with safe haven flows with the Dollar now near a one month high against most of its counterparts. The mood overshadowed the ISM manufacturing figures which fell from 61.3 to 59.8.

The only significant news is to be a speech by Jerome Powell later this afternoon.

 

Summary: 
Sterling was boosted in the afternoon after it was revealed by a government official that the UK is willing to compromise on Irish border rules. Euro unemployment drops further, and US manufacturing slows.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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