US core PCE came in marginally lower than expected month-on-month, once again causing GBPUSD and EURUSD to test the highs seen earlier on in the week. However the gains were limited suggesting strong resistance at these levels. It seems markets are reluctant to chase new highs as we head into the end of Q3.
*Daily move - against G10 rates at 7:30am, 30.09.24
** Indicative rates - interbank rates at 7:30am, 30.09.24
Following French and Spanish CPI numbers coming in lower on Friday, focus today falls on German CPI numbers. If the German CPI follows the trend, the odds of another rate cut by the ECB in October will be bolstered. Currently markets rate the chances of a 0.25% rate cut at 80%.
Final revisions of GDP for Q2 came in lower than expected at 0.5% versus the projected estimate of 0.6%. Nonetheless, GBP remains relatively strong at the start of the week.
US data will feature heavily over the week ahead, with the usual series of job numbers, culminating in nonfarm payroll numbers, coming out on Friday. Additionally, this week brings the release of the ISM manufacturing and services indices. Markets are forecasting 146,000 job additions in September, with the unemployment rate expected to hold steady at 4.2% and average hourly earnings to remain at 3.8%. If we see any soft numbers in the job sector we would expect USD to be weaker.
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