In line with this week’s weak manufacturing activity report, data just out indicated that activity in the nation’s all-important services sector slowed more than expected last month. Against this backdrop, market participants will keep a close watch on next week’s NIESR GDP estimate for the third quarter along with the BoE policy meeting for further cues.
Across the Atlantic, investors will closely watch today’s non-farm payrolls report, especially after weak labour data released last month raised concerns over the prospects of a steady growth in the sector. With slowing growth and deflationary pressure threatening the Euro zone, the ECB outlined some details about the purchase of covered bonds and asset-backed securities while announcing its policy decision yesterday.
Pound Sterling – UK Markets
Data just released indicated that growth in Britain’s dominant services sector slowed more than anticipated for September, in line with this week’s dismal manufacturing activity data and in contrast with yesterday’s upbeat construction sector report. It looks difficult for the Pound to gain ground against the majors today following weak services sector activity data. Largely mixed PMI reports this week have raised concerns over the nation’s economic performance for September. Against this backdrop, market participants keenly eye next week’s NIESR GDP estimate for a closer insight into the nation’s economic performance during the third quarter. Additionally, with mixed economic data suggesting a moderation in the nation’s economic recovery and ongoing debate among policymakers about the exact timing of raising interest rates, next week’s BoE monetary policy meeting will be keenly scrutinised for further direction.
Yesterday, the Pound nudged lower against the majors after Ben Broadbent, a BoE official, indicated that the nation’s economy is not strong enough to call for an increase in interest rates anytime soon.
US Dollar – US Markets
The greenback is trading in a tight range against the majors ahead of today’s release of the official labour market report in the US. Markets are expecting non-farm payrolls data to show a more than 200K job additions for September, thus confirming that the nation’s employment sector remains sturdy despite last month’s lacklustre performance. With the US Fed anticipated to end its asset purchase programme this month, today’s labour market numbers could be crucial in helping investors to gauge the prospects of an early interest rate rise in the nation. Meanwhile, the ISM report is anticipated to show that the pace of services sector activity in the US slowed for September, in sync with this week’s downbeat manufacturing PMI numbers. Additionally, hawkish comments from James Bullard, a US Fed official, earlier today highlights the strengthening prospects of higher interest rates in 2015.
The US Dollar was pretty volatile against the Euro in yesterday’s trading session following mixed US economic data. The initial jobless claims report surprised on the upside while factory orders showed a more than expected drop for August.
Euro – European Markets
The Euro gained ground against its major peers immediately after the ECB President’s press conference, as Mario Draghi offered no hints about the central bank undertaking a monetary easing programme that would include the purchase of sovereign bonds. In yesterday’s policy meeting, the ECB kept its key interest rate unchanged at 0.05%, in line with market expectations. In the post-meeting press conference, the ECB President stated that the central bank would start purchasing covered bonds from the middle of October 2014 and asset-backed securities at some point in the fourth quarter of 2014. The central bank plans to conduct the asset purchases over a span of two years. However, the single currency failed to sustain levels that were scaled during the ECB Chief’s press conference.
Data out earlier today showed that the revised services PMI readings across most European nations were fairly subdued for September, in line with this week’s downbeat manufacturing PMI figures. Market focus during today’s session shifts to the upcoming labour market data from the US.
Other Currencies – Highlights
The Canadian Dollar lost ground against the greenback in yesterday’s trading session, with the US Dollar-Canadian Dollar pair rising above the 1.10 mark. The drop in the Canadian Dollar can be attributed to weak global crude oil prices due to ample global supplies. Additionally, downbeat domestic economic releases during this week kept the Canadian Dollar under further pressure. Data showed that the nation’s GDP remained stagnant for July and the pace of manufacturing activity for September slowed for the first time in five months.
Today’s macro data is anticipated to show that Canada’s trade surplus narrowed for August after exports climbed to a multi-year high for the previous month. With no other domestic macro triggers, today’s official labour market report in the US will be crucial for providing further direction to the Canadian Dollar against the greenback.
Dollar Weakens as Fed Turns Dovish, Eyes on BoE
Euro Plummets as Draghi Opens Door For Rate Cuts
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