Friday began with a continuation of Thursday’s USD weakness as we hit month and quarter flows in the market. However by the end of the day, the greenback actually finished higher following the release of University of Michigan sentiment figures coming in higher than expected. The Fed’s preferred measure of inflation, core PCE fell in line with expectations.
Over the weekend, congress averted a shutdown with a stopgap that will keep the government open through to November 17th, and thus keeps alive the prospect of a rate hike in November.
* Daily move - against G10 rates at 7:30am, 02.10.23
** Indicative rates - interbank rates at 7:30am, 02.10.23
Markets are risk-on this morning after the aversion of a US shutdown, with equities set to open the week higher. USD is gaining as well on the prospect of another rate hike in November. GBP could come under pressure today, with political drama brewing ahead of this week's Conservative Party conference. Final manufacturing PMI numbers for September are due today, with very little deviation expected from previous estimates.
For the rest of the week, the US job market will come under focus with the release of the JOLTS job openings out tomorrow, ADP payrolls on Wednesday, and non farm payrolls on Friday. And we'll see final PMI numbers from the services industry out from Europe, the UK, and US.
With the US shutdown averted now, the full release of US job numbers will be the highlights for this week. The US job market continues to be resilient, and with expectations of a steady 165,000 job additions expected then the Fed’s hawkish stance should remain and the data should continue to support the dollar.
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