The USD is modestly lower vs the major currency pairs. The EUR is higher by 0.22% despite modestly weaker PMI (but mixed – see below). the GBP is also higher today by 0.13% to start the US session. The USDJPY is near unchanged.
IN the video above, I kickstart the trading day with a look at the 3 major currency pair – the EURUSD, USDJPY and GBPUSD. The US employment data will NOT be released, but hte private S&P Global Services PMI Final (preliminary 53.6), and the September ISM non manufacturing index will be released (est 51.7 vs 52.0 last month).
Fed’s Goolsbee, who has recently liked to be heard almost daily, is scheduled to be on CNBC at 8:30 AM ET. Other central bank speakers scheduled includes:
- 13:20 GMT/09:20 ET – Boe Governor Bailey (dovish – voter)
- 13:50 GMT/09:50 ET – ECB’s Schnabel (hawkish – voter)
- 17:40 GMT/13:40 ET – Fed’s Jefferson (neutral – voter)
Earlier today, NY Fed President (voter) Williams emphasized that uncertainty and change will remain a constant feature of the economic landscape for the foreseeable future, making clear that forecasting with confidence is difficult. While he avoided offering any specific guidance on the path of monetary policy or the economic outlook, Williams highlighted that effective policy depends heavily on public understanding, stressing the importance of clear and transparent communication by the Fed. He also noted that tools once viewed as “unconventional” monetary policy have now become part of the standard toolkit, reflecting a permanent shift in how central banking operates. Finally, he underlined that anchoring inflation expectations remains critical, ensuring that the Fed’s policy framework continues to foster stability even amid evolving conditions.
In Europe today, the tilt from the economic data was weaker than expected.
Non-PMI Data
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French Industrial Production m/m: -0.7% (worse than expected 0.3%, prior -1.1%)
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Italian Retail Sales m/m: -0.1% (in line with 0.0% forecast, prior 0.0%)
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Eurozone PPI m/m: -0.3% (worse than expected -0.1%, prior 0.3%)
PMI Data (Services)
Better than expected
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Spain Services PMI: 54.3 (vs 53.3 forecast, 53.2 prior)
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Italy Services PMI: 52.5 (vs 51.5 forecast, 51.5 prior)
Worse than expected
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France Final Services PMI: 48.5 (vs 48.9 forecast, 48.9 prior)
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Germany Final Services PMI: 51.5 (vs 52.5 forecast, 52.5 prior)
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Eurozone Final Services PMI: 51.3 (vs 51.4 forecast, 51.4 prior)
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UK Final Services PMI: 50.8 (vs 51.9 forecast, 51.9 prior)
Summary: Spain and Italy services PMIs surprised to the upside, while France, Germany, the Eurozone, and the UK all underperformed. Non-PMI data also skewed weaker, with French industrial production and Eurozone PPI both below expectations.
Would you like me to also highlight the market implications (e.g., EUR bias, bond yields, risk sentiment) based on this data mix?
Over the weekend, Japan’s ruling LDP will elect a new prime minister tomorrow following Shigeru Ishiba’s resignation after July’s upper house election defeat. The race is led by Sanae Takaichi, who could become Japan’s first female leader, and Shinjiro Koizumi, who would be the youngest prime minister in the post-war era. Takaichi, a protégé of Shinzo Abe, is campaigning on reviving “Abenomics” with a more pro-stimulus and looser monetary policy stance, which could set up tensions with the BOJ’s current approach. Koizumi, son of former PM Junichiro Koizumi, represents a more moderate voice, focusing on reforms, productivity, and wage growth, while signaling less disruption to existing BOJ policy. A third candidate, Yoshimasa Hayashi, the current chief Cabinet secretary, is seen as a steady but less likely option, though he has a reputation as a reliable government “handyman.” Whoever wins will face the twin challenges of aligning with BOJ policy while managing trade relations with the US, as well as addressing Japan’s longer-term demographic crisis.
Taking a view of the markets as the US session begins, the US stocks are higher after record closes for the major indices:
- Dow Industrial Average +94 points
- S&P index +12 points
- Nasdaq index +42 points
In the US debt market, yields are modestly lower:
- 2-year yield 3.542%, -0.6 basis points
- 5 year yield 3.666%, -0.9 basis points
- 10-year yield 4.080%, -0.9 basis points
- 30-year yield 4.679%, -1.8 basis points
In other markets;
- Crude oil is up $0.21 at $60.72
- Gold is up $3.50 at $3859
- SIlver is up $0.50 at $47.45
- Bitcoin is down -$183 at $120,429
The USD is modestly lower. No jobs today due to shutdown. ISM-non manufacturing awaited
