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Service Sector PMIs Put the EUR, GBP and Greenback in Focus

With sentiment towards the global economy deteriorating, today’s service sector PMIs need to hold up for the markets to avoid a meltdown…
Bob Mason
Forex Markets Currency Trading Concept.

Earlier in the Day:

It was another quiet day on the economic calendar through the Asian session this morning.

Japan service sector PMI and Australia trade data provided direction through the early part of the day.

Outside of the stats, the markets also responded to weak overnight economic data out of the U.S that refueled concerns over the state of the global economy.

For the Japanese Yen

The finalized September service sector PMI came in at 52.7, which was in line with forecasts, whilst down from a prelim 53.3. According to the finalized Markit survey,

  • While new orders grew at the slowest pace this year, firms reported continuingly strong order book volumes in September.
  • New export sales growth was the strongest since Jul-2018.
  • Employment growth was marginally higher than August’s 18-month low.
  • Business confidence rose to a 3-month high supported by expansion plans and stronger demand.

The Japanese Yen moved from ¥107.053 to ¥106.999 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.07% to ¥107.11 against the U.S Dollar.

For the Aussie Dollar

The trade surplus narrowed from a revised A$7.253bn to A$5.926bn in August, a decrease of A$1,327m from July 2019. Economists had forecasted a narrowing to A$6.00bn.

According to the ABS,

  • Goods and services credits fell by A$1,464m (3%) to A$40,982m.
    • Non-rural goods exports fell A$971m (4%), with non-monetary gold credits falling by A$601m (22%).
    • Rural goods exports rose A$51m (1%), with the net exports of goods under merchanting rising by A$3m (25%).
    • Services credits rose A$53m (1%).
  • Goods and services debits fell A$137m to A$35,056m.
    • Intermediate and other merchandise goods imports fell A$424m (4%).
    • The imports of capital goods fell by A$115m (2%) and consumption goods by A$76m (1%).
    • Non-monetary gold imports rose A$313m (40%), with services debits rising A$164m (2%).

The Aussie Dollar moved from $0.067111 to $0.67093 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.07% to $0.6712.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.03% to $0.6267.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Service sector PMI numbers are due out of Spain and Italy, along with Eurozone retail sales figures.

Finalized French, German, and Eurozone service sector and composite PMIs are also due out.

Barring deviation from prelim, we would expect the market focus to be on the Eurozone services PMI and composite and retail sales figures.

Outside of the numbers, geopolitical risk will continue to influence.

At the time of writing, the EUR was up by 0.01% to $1.0960.

For the Pound

It’s a relatively busy day ahead on the data front. September’s services PMI and composite are due out later this morning.

Service sector activity is a key contributor to the UK economy. Any further slowdown in service sector activity will add further pressure on the Pound.

It will ultimately continue to boil down to UK politics and Brexit on the day, however.

At the time of writing, the Pound was down by 0.04% to $1.2298.

Across the Pond

It’s a busy day ahead on the economic calendar. Key stats include the markets’ preferred ISM non-manufacturing ISM figures, factory orders, and weekly initial jobless claims numbers.

Of less influence on the day are finalized services and composite PMI numbers.

On the political front, any impeachment talk and any updates on trade will also impact. With a week to go before trade talks are set to resume, any negative chatter would weigh on the Greenback. Market jitters over the U.S economy will make the Dollar all the more sensitive.

The Dollar Spot Index was down by 0.01% to 99.006 at the time of writing.

For the Loonie

It’s another quiet day on the economic calendar. There are no material stats due out of Canada later today, leaving the Loonie in the hands crude oil prices and sentiment towards impending trade talks.

The Loonie was up by 0.02% at C$1.3323, against the U.S Dollar, at the time of writing.

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