It has been a volatile ride on Tuesday, with the US$ initially rising to new trend highs as the DXY reached 99.67, last seen in May 2017, after the generally dovish Chicago Fed President, Charles Evans indicated that the Fed could have delivered enough rate cuts to lift inflation back to the 2% target. That all turned around sharply after some generally underperforming global manufacturing data, topped off by the US September ISM manufacturing index which came in at 47.8 vs 50.0 expected to record the weakest reading since 2009, fueling fears of an impending global slowdown and boosting safe haven assets. US stocks have had a tough day and have finished down around 1.25%, while safe haven assets including the Jpy, Chf and Gold have had strong sessions, with Gold ending up by 0.54% after a volatile ride, but up $20 from the session low. WTI ended the day down by 0.65%.
Earlier in the day, the Eurozone Manufacturing PMI was finalised at 45.7 in September, down from 47.0 in August, the lowest level since October 2012. The German figure hit a 123-month low of 41.7. In inflation data, the Eurozone CPI slowed to 0.9% yy in September, down from 1.0% yy and missed the expectation of 1.0% yy.
Wednesday will see a relative thin calendar, and it may well be a sideways session while waiting on the US Jobs report on Friday. In the meantime, there is nothing to come from Asia, while the UK Construction PMI will be the only inspiration in European time (exp 45). We may see a bit of action when the US ADP Jobs data is released (exp 140K), while the ISM-NY Business Conditions Index is also due. The Fed’s Williams will be speaking, but otherwise it is all on hold for the September US employment report due on Friday (exp 3.7%, +140K, AHE; +0.3%mm, AWH; 34.4).
Economic data highlights will include:
Wed: China National Holiday, Australian Import Price Index, New Home Sales, Swiss CPI, US ADP Employment Change, ISM Business Confidence
Market moves, in brief:
FX: DXY 99.13 (-0.26%)
Bonds: US10Y; 1.641% (-1.78%), German 10Y; -0.561% (+1.8%), UK 10Y; +0.395% (-2.5%), Australian 10Y; 0.98% (-4.6%), NZ 10Y; 1.18% (+1.8 %), China 10Y; 3.125% (-0.34%)
Stock Indices: DJI; -1.28%, S+P; -1.23%, NASDAQ; -1.13%, EUStoxx50; -1.43%, FTSE100; -0.65%, Shanghai Composite; -0.92%,
Metals: Gold $1480 oz (+0.49%), Silver $17.25 oz (+1.25%), Copper $2.5645 lb (-0.54%), Iron Ore $92.16 per tonne (NYMEX) (-0.09%),
Oil: WTI $53.93 pb (-0.65%)
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