JPY was the biggest loser yesterday after Japan’s PM Shigeru Ishiba ruled out further interest rate hikes. JPY had a stellar Q3 gaining by a near 9% against GBP on the back of hawkish rate expectations. This dovish message from Ishiba could signal that the good times are over for JPY and we should remain braced for further declines in the currency.
ADP payrolls from the US came in higher than expected at 143,000 and the previous number received a higher revision fuelling further gains for USD. The currency continues to benefit from safe haven flows as tensions in the Middle East continue.
*Daily move - against G10 rates at 7:30am, 03.10.24
** Indicative rates - interbank rates at 7:30am, 03.10.24
GBP has taken a hit this morning after Governor Bailey told The Guardian that the Bank of England (BoE) could become a “bit more aggressive” in cutting rates if inflation continues to be good. As we know, one of the reasons GBP has been performing so well is the expectation that the bank would be doing smaller rate cuts than its peers. So, Governor Bailey following through on his words would have a negative impact on GBP.
Add to this the risk of a lower risk sentiment, as well as the upcoming budget and GBP might underperform in the short to medium term.
As we turn our gaze to today, all eyes will be on the weekly jobless claims and the ISM services index, with a keen focus on the employment segment. This will set the stage for tomorrow's nonfarm payroll figures, providing insight into whether the USD's upward momentum will persist.
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