Government debt fell after data showing expansion in US manufacturing bolstered wagers that the Fed will raise rates this year. Crude oil and gold retreated earlier today, while a gauge of the US dollar tested one-week highs. Sterling fell close to post-Brexit lows.
- US ISM Manufacturing last month surprised positively, increasing to 51.5 from 49.4 last month and topping estimates of 50.4.
- The Markit US Manufacturing PMI rose to 51.5, from 51.4 in August; the consensus estimate was 51.4.
- Construction spending declined 0.7% month-on-month in August, quickening its pace from a 0.3% drop in July and missing projections of a 0.3% rise.
- The Fed’s New York President William Dudley spoke post-ISM, and advised caution in hiking citing limits on the Fed’s ability to respond to a recession with borrowing costs close to zero. His colleague, Cleveland Fed President Loretta Mester, reiterated her view that November’s meeting is a “live” one.
- Fed funds futures pricing on Bloomberg are pricing a 60% chance of a hike in December, up from 51% a week ago. Investors will now turn their attention to this Friday’s payroll data, and a positive report could increase odds further.
- The S&P 500 Index lost 0.3%, with REITs leading losers, declining about 1.8% as a group.
- Treasury yields rose as better-than-expected manufacturing data bolstered arguments for a rate hike by year-end. The benchmark 10yr yield rose 4bps to 1.62%
- The dollar strengthened, as the Blomberg Dollar Spot Index which tracks the greenback against 10 major peers, was 0.2% higher earlier today and neared its one-week high.
- RBC Canadian manufacturing PMI last month fell to 50.3 from 51.1 in August.
- According to three senior figures in Prime Minister May’s administration, British financial-services companies will get no special favors in Brexit negotiations, with the government refusing to prioritise the protection of the sector after the UK leaves the EU.
- Theresa May told delegates at her Conservative Party’s annual conference at the weekend that she will curb immigration, stoking speculation that the nation is headed toward a Brexit scenario that involves limited access to the EU’s single market.
- The RBA kept its cash rate unchanged earlier today at 1.50%, as expected, following an unexpectedly strong rebound in commodity prices which has started to boost its economy, already growing at an above-average pace.
- Newly-appointed Governor Lowe’s views on the risks of easy money to asset prices are already prompting analysts to begin cutting down expectations of future interest-rate cuts.
- Prices of Australia’s two biggest exports, iron ore and coal, have rebounded strongly this year, lifting the nation’s terms of trade.
- September PMI rose to 50.1 from 49.8 in August, beating the median forecast of 49.9.
- Spot gold fell 0.7% earlier today to $1,308.33/Oz. The precious metal is nearing the bottom of its current trading range since end June, with the key support lying at $1,300/Oz.
- Silver for immediate delivery slumped 2.7% to $18.7110/Oz earlier today, and is threatening to break below its 100-day moving average.
- Crude oil for November delivery rose 1.2 % to settle at $48.81/bbl, its highest close in more than a month. The key resistance lies at $50/bbl.
- While OPEC outlined an accord to curb output by as much as 750,000 bpd, Libyan production rose and will advance further this month, according to an official of the state oil company.
- Spot 1.3677
- USDSGD looks set for its second straight day of gains as better-than-expected US manufacturing data boosted the greenback.
- The currency pair was 0.3% higher at 1.3682 earlier today; the 1.3700 key resistance is likely to be tested soon.
- Spot 0.7673
- AUDUSD fell 0.3% to 0.7660 following the RBA’s rate decision to expectedly leave rates unchanged. No sudden major movements are expected for AUDUSD, given that almost every economist surveyed were expecting the RBA to stand pat.
- Spot 1.3124
- USDCAD rose 0.5% to 1.3144 amid USD overnight strength.
- The rise might be short-lived especially if oil prices continue to be supported by OPEC’s recent output accord.
- Spot 6.6763
- USDCNH was 0.1% higher at 6.6822, mostly due to a stronger US dollar overnight.
- China markets remain shut for a week-long national holiday.
- Spot 102.20
- USDJPY gained 1.0% to 102.39, following increased expectations of an interest-rate hike in the US. The yen weakened against all of its 16 major peers earlier today.
- The downward trend for USDJPY is in danger of being broken; a close above the 102 level could potentially signal a reversal.
- Spot 1.2830
- GBPUSD slid to its lowest level since 7th June – 0.5% lower to 1.2817, earlier today.
- The post-Brexit low of 1.2798 acts as the last bastion of support for the currency pair, as the pound continues to face pressure following renewed Brexit fears.