3rd October 2019 Market Update
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🇬🇧 GBP – Sterling had a directionless day yesterday as traders digested Johnson’s speech at the Conservative Party Conference. The Pound fell by as much as 0.5% against the US Dollar early on Wednesday morning following poor Construction sector results and in anticipation of the speech but despite Boris offering no new information, Sterling managed to move away from the lows. It didn’t, however, regain all the losses and continues the downward trend for the Pound of recent days. Measures of volatility are showing an increase, and this will undoubtedly continue over the course of the month.
Today sees the Services sector PMI results being published at 09:30 which is the most significant of the trio. Manufacturing and Construction figures have so far been poor and there is a danger that the Services sector could follow them into contractionary territory. This would be significant for the UK economy and to the detriment of the Pound. The Bank of England’s Tenreyro will speak later but is likely to be overshadowed. The EU’s response to the Government’s plans could provide the biggest rate movement when it comes.
🇪🇺 EUR – The Eurozone was devoid of data yesterday which contributed to another quiet day for the single currency. Spanish unemployment change had no impact and any moves were as a result of external factors.
Today will be more data driven with the release of Services sector PMI results. The previous result of 52 showing marginal growth could be under threat as Germany’s economy falters and consequently could cause a drop for the Euro. Later, at 10am, Retail Sales figures are due to provide a mixed picture with the monthly reading expected to improve but the yearly result anticipated to fall. Markets will decide which is the more significant and move the rates accordingly.
🇺🇸 USD – The US Dollar slipped against the Euro and Yen yesterday following concerns surrounding the health of the US and global economies. ADP Employment Change results disappointed for September which could mean that Friday’s Non-Farm Payrolls will be similarly negative for the Greenback. Analysts were relieved that the numbers were not even worse which initially helped the US Dollar before it backed off later in the day.
Focus will be on the Services sector PMI readings at 14:45 which last time were just above the break-even level. If the poor manufacturing results are seen to have spilled over into the services sector then it will have an effect on the Dollar and rate decisions for the Fed going forward. There are a couple of speeches from Fed officials tomorrow who may comment on the latest data.
GBP: Sterling choppy following latest Brexit developments
EUR: Run of poor data could continue today
USD: Slipped yesterday as markets favour alternative safe havens
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