Macro Events & News – 3 Oct 2019


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By: Andria Pichidi

FX News Today

  • US set to impose tariffs on USD 7.5 bln of EU goods, ranging from aircraft to agricultural products.
  • Risk aversion is sending global stock markets in a sell-off while the announcement of US tariffs will add to the negative backdrop today.
  • Wall Street closed with sharp losses yesterday following also the poor jobs numbers, which added to concerns over the outlook.
  • BoJ board member Funo: “BoJ must maintain sufficiently low interest rates for a prolonged period”, while saying that the BoJ will prevent any risks to the inflation target from materialising.
  • US futures are slightly higher, but European futures remain in the red and the risk of further corrections on stock markets seems pretty high. UK100 down by more than 3%.
  • USDJPY is trading at 107.16 after tumbling on risk aversion yesterday.
  • The WTI future meanwhile is trading at just $52.52 per barrel after selling off for 8 straight days.
  • The UK curve flattened, while spillover effects also saw Bunds moving up, as markets prepare for additional fiscal spending on both sides of the channel.
  • BREXIT: PM Johnson’s latest Brexit plan is not expected to bring a real breakthrough in talks and EU officials are reportedly considering how the October 31 deadline can be extended, even if Johnsons refuses to ask for an extension.

Charts of the day

Technician’s Corner

  • Printed 1-week highs of 1.0962 after opening at 1.0920, up from Tuesday’s trend low of 1.0879. The Euro’s move higher appears to be more of a case of Dollar weakness than Euro strength following the weak U.S. manufacturing ISM on Tuesday, and the not overly impressive ADP jobs report this morning. U.S. recession fears have been on the rise again, resulting in lower Treasury yields. Traders will likely hold fire into the end of the week, to see how the services ISM on Thursday, and the September employment report on Friday play out. EUR-USD resistance is at 1.1000.
  • Fell to six-session lows of 107.17, down from opening highs of 107.60. The pairing has so far found support ahead of the 50-day moving average at 107.05, though today’s severe risk-off conditions, including a sharp Wall Street sell-off, and lower Treasury yields, should keep Dollar gains contained. U.S./China trade uncertainty can be expected to limit upside as well. The pairing has been inside a 108.50 to 107.00 trading range for nearly a month, and will need a decisive break of either of those levels to see a shift in sentiment. For now, given all the uncertainties facing the markets, we look for the risk sensitive pairing to test downside support.

Main Macro Events Today

  • ISM Non-Manufacturing PMI (USD, GMT 14:00)
  • The ISM-NMI index is expected to fall to 54.5 in September from 56.4 in August and a 19-month low of 56.1 in March, versus a 13-year high of 60.8 in September of last year. The sentiment surveys have been erratic in recent months, likely due to competing perspectives on the trade war, troubles abroad, and stock price gyrations.
  • Jobless Claims (USD, GMT 14:00)
  • Initial jobless claims are expected to increase 5k to 218k for the week of September 27, after edging up 3k to 213k in the week of September 21. Part of the prior week’s gain likely reflects some lift from the effects of the UAW strike at GM which began September 16 that included some 49k workers. Strikers don’t qualify for benefits, but suppliers to GM do. Beyond the strike, claims look poised to fluctuate around 212k in September, which matches the 212k cycle-low in July that was also seen last September. We saw prior claims averages of 216k in August, 222k in June, and 217k in May.

Support and Resistance levels

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