Caution ahead of Friday’s US non-farm payrolls report may have kept overall volatility in check, but asset-specific catalysts could still bring some movement to major markets.
So, what were the headlines that stole the show on Thursday?
Let’s break it down below:
Titles:
- Bank of Japan Member Asahi Noguchi It is preferable to adjust monetary policies at a “slow pace” and pause to assess the impact of the first interest rate rise before raising interest rates again
- Inflation in Switzerland Decreased by 0.3% m/m in September (-0.1% expected, 0.0% previously) due to cheaper gasoline, accommodation and holidays. On an annual basis, prices rose by 0.8%, the slowest increase since July 2021
- HCOB Germany Final Services PMI Confirmed at 50.6 as expected in September; “Prices charged also rose more slowly than in August” “Employment fell at the fastest rate in more than four years.”
- HCOB final services PMI for the euro area Revised up from 50.5 to 51.4 in September; “Excise duties have risen only modestly.” “Job creation was a little faster than in August.”
- S&P Global UK Final Services Purchasing Managers’ Index (PMI). It was revised downward from 52.8 to 52.4 in September
- Bank of England Governor Bailey He said the central bank may be “a little more aggressive” in cutting interest rates if inflation continues to improve
- Industrial producer prices in the euro area Up 0.6% m/m in August (0.4% expected, July reading revised down from 0.8% to 0.7%)
- US Challenger job cuts The number fell from 75,891 to 72,821 in September, and he noted that most of the planned hiring comes from seasonal employers.
- Weekly initial unemployment claims in the United States Week ending September 28: 225k (222k expected, 219k previously)
- US S&P Global Final Services PMI It was revised downward from 55.4 to 55.2 in September
- US President Biden He said that the United States is discussing with Israel the possibility of striking Iran’s oil infrastructure
- US Services Purchasing Managers’ Index (ISM). It jumped from 51.5 to 54.9 in September, but the employment index contracted for the first time in three months.
- US factory orders Declined 0.2% m/m (0.1% expected) in August after a 4.9% jump in July
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
The lack of high-level data releases kept major assets in ranges early in the day.
Volatility rose at the start of the European session, with alternatives to the US dollar such as gold, crude oil, Bitcoin and US stock futures falling. Rising tensions in the Middle East, combined with the prospect of traders taking profits ahead of Friday’s US non-farm payrolls report, may have prompted the moves.
During the US session, the 10-year Treasury yield gained upward momentum as jobs data fueled expectations of further Fed rate cuts. The price of crude oil also rose after President Biden mentioned talks about Israel potentially targeting Iranian oil infrastructure.
Gold rose on the news, renewing daily highs before closing at $2,655, while WTI rebounded from $70.60 to reach $73.80. The 10-year Treasury yield today capped near 3.85%, Bitcoin settled below $61,000, and US stock indexes closed slightly lower than their opening levels.
Forex market behavior: US dollar against major currencies:
Overlay of the US dollar against major currencies Chart by TradingView
The US dollar started strong against the yen, Swiss franc, Australian and New Zealand dollars, likely due to weak data from Australia and New Zealand and traders pricing in a stronger-than-expected ADP report on Tuesday.
The USD/JPY pair initially rose on dovish speculation from the Bank of Japan, but lost momentum after BOJ member Noguchi made clear that policy adjustments were still possible, albeit at a slower pace.
Later, the British pound was hit hard after Bank of England Governor Bailey hinted at the possibility of “more aggressive” interest rate cuts in a newspaper interview. Meanwhile, a weaker-than-expected Swiss CPI report increased the odds of a rate cut by the Swiss Central Bank, weighing on the franc.
The US dollar maintained gains against the Australian dollar, New Zealand dollar and British pound before US labor market data sparked volatile price action. Ultimately, the dollar rallied to higher levels, supported by a stronger-than-expected ISM Services PMI and concerns about Israel potentially targeting Iranian oil infrastructure.
Potential catalysts coming on the economic calendar:
- The unemployment rate in Switzerland is at 5:45 am GMT
- French industrial production at 6:45 am GMT
- Bank of England member Hugh Bell will deliver a speech at 7:55 a.m. GMT
- UK Construction PMI at 8:30 AM GMT
- The US NFP report will be released at 12:30 PM GMT
- FOMC Member John Williams will deliver a speech at 1:00 PM GMT
- Canada’s IVEY PMI at 2:00 PM GMT
It’s NFP Friday, err! Price action is likely to be quiet ahead of this report, but we could see pockets of volatility when Switzerland cuts its unemployment rate and Bank of England chief economist Hugh Bell delivers a speech in London.
In the United States, labor market numbers are expected to be weaker in September, which may fuel expectations of a Fed rate cut. Make sure you read our US NFP Report Event Guide If you are trading the release!
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