Global growth fears increased further..
Global growth fears increased further during Wednesday with slightly weaker than expected US ADP jobs data and further ramifications from Tuesday’s ISM data.
The dollar was undermined by concerns that the US economy was slowing with fresh speculation over Fed rate cuts while US yields declined further.
Global equities declined sharply with European markets particularly vulnerable as the US announced retaliatory tariffs on EU exports.
Narrowing yield spreads still provided limited net support for EUR/USD. Sterling failed to gain significant traction from the government’s Brexit proposals.
Oil prices declined sharply on demand fears and a build for the latest EIA crude inventory data.
The slide in oil prices undermined the Canadian and Norwegian currencies. Precious metals recovered ground as the dollar retreated and risk appetite deteriorated.
Tight ranges prevailed ahead of the New York open with markets still considering the implications of Tuesday’s weak ISM manufacturing data. There were fresh concerns over the outlook for the global economy which would also be significant in eroding Euro-zone exports and limited potential Euro support, although there was EUR/USD support above 1.0900.
The UK PMI construction index declined to 43.3 for September from 45.0 previously which was below consensus forecasts with the second weakest reading since June 2009. The commercial sector continued to decline sharply as political uncertainty sapped confidence. Overall business confidence remained weak and employment declined at a faster pace.
Political developments remained important with markets sceptical that the government’s revised Brexit plans would receive a favourable response from the EU. The government’s official proposals to replace the Northern Ireland backstop did secure backing from Northern Ireland’s DUP. The EU was initially circumspect, although there was certainly little in the way of positive rhetoric which limited potential Sterling support. Irish Prime Minster Varadkar stated that proposals do not fully meet the agreed backstop objectives, but the key will be whether negotiations continue over the next few days.
GBP/USD settled close to 1.2300 with GBP/EUR around 1.1220. Sterling was unable to make headway on Thursday as weak global risk appetite also limited support, although political rhetoric is liable to dominate.
|08:45||Markit/ADACI Svcs PMI(SEP)||51.6||50.6|
|08:45||Fed President Evans Speaks||-||-|
|08:45||ECB Luis De Guindos Speaks||-||-|
|08:50||Markit Serv PMI(SEP)||53.3||53.4|
|08:50||Markit Mfg PMI(SEP)||52.7||52.7|
|08:55||EUR German PMI Composite(SEP)||51.4||51.4|
|08:55||EUR German PMI Services(SEP)||-||54.8|
|09:30||GBP PMI Services(SEP)||51||50.6|
|10:00||Euro-Zone PPI (M/M)(AUG)||0.20%||0.20%|
|10:00||Euro-Zone PPI (Y/Y)(AUG)||0.20%||0.20%|
|10:00||Euro - Zone Retail Sales (M/M)(AUG)||-0.60%||-0.60%|
|10:00||Euro - Zone Retail Sales (Y/Y)(AUG)||2.00%||2.20%|
|13:30||FOMC Governor Keith Randal Quarles Speech||-||-|
|13:30||USD Continuing Jobless Claims||1.645K||1.650K|
|13:30||USD Initial Jobless Claims||215K||213K|
|14:45||USD Markit PMI Composite(SEP)||-||50.9|
|15:00||USD ISM Non-Manufacturing PMI(SEP)||55.8||56.4|
|15:00||USD Factory Orders(AUG)||-0.50%||1.40%|
|15:00||BoE MPC Member Silvana Tenreyro Speech||-||-|
|17:10||FOMC Member Mester Speaks||-||-|