The US$ is stronger again today, underpinned by soaring bond yields after a stronger than expected ADP employment report, showing growth of 230k in September, well above the expected 185K. On top of this, the US PMIs all beat expectations, unlike the EU PMIs which all came in pretty much in line with expectations although Germany missed on both the manufacturing and services readings. At the end of the session, some upbeat comments from Jerome Powell did the dollar no harm at all, giving it another nudge to the topside. The Euro is lower, and has taken out the important 1.1500 level right on the close as stop losses were triggered in very thin conditions, while US$Jpy soared above 114.00, underpinned by the widening interest rate differentials. The Aud and Kiwi are at new trend lows, while Sterling remained steady, after the UK Prime Minister Theresa May’s Conservative Party conference speech was mostly ignored. In other markets, the US stock indices are relatively steady although the DJI did make yet another new high. The metals gave up the previous day’s gains, while WTI soared to new highs after an early dip, but trader were focused on the upcoming Iranian sanctions and their expected squeeze on supply, despite weekly data showing that US crude stockpiles ballooning four times more than expected. US sanctions on Iranian oil exports will begin on Nov 4 and could take some 3% off the global market’s daily supply.
Thursday will be a thin calendar but will begin with the Australian New Home Sales and Trade Balance for August (exp +$1400 mio). After that it will only be the weekly US August Factory Orders (exp 0.9%) and the weekly Jobless Claims to provide the entertainment. The Fed’s Quarles and the ECB’s Coeure will be today’s speakers.
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