The euro fell against the US dollar on Monday as business activity reports for the euro zone economy disappointed, briefly extending declines after U.S. data showed activity there held steady. The dollar index retreated from the day’s high 101.06, to 100.82
The soft euro zone data supported expectations for more interest rate cuts by the European Central Bank this year, with markets currently pricing in a roughly 77% chance for a cut of at least 25 basis points (bps) at the central bank’s October meeting. The EURINR drop below 93 mark.
Economic Data and Events Released Yesterday
- The HCOB German flash composite Purchasing Managers’ Index, compiled by S&P Global, fell to 47.2 from 48.4 in August, below the 48.2 forecast in a Reuters poll. Any reading below 50 indicates contraction.
- S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, was little changed at 54.4 this month compared to a final figure of 54.6 in August, with a reading above 50 signaling expansion.
- The Eurozone Manufacturing Purchasing Managers Index (PMI) dropped from 45.8 in August to 44.8 in September, missing the expected 45.6 figure. The index plunged to a nine-month low.
- The bloc’s Services PMI tumbled from 52.9 in August to 50.5 in September. The data came in way below the market forecast of 52.4 and hit a seven-month bottom.
- The HCOB Eurozone PMI Composite contracts to 48.9 in September vs. 50.6 expected and August’s 51.0 readout, registering an eight-month low.
- The preliminary estimate of the UK S&P Global Composite Purchasing Managers’ Index (PMI) fell to 52.9 in September, below economists’ forecast of 53.5 but still well above the 50 level that separates growth from contraction.
Commodity Update
Gold: Gold surged to a record high on Monday, make its fifth consecutive session of gains. The rally comes after the Federal Reserve implemented its first interest rate cut in four years last week, signaling that further cut may be on the horizon.
Crude Oil: Crude oil prices slipped by over 1% as disappointing business activity data from the euro zone fueled concerns about weak demand. Brent crude futures for November delivery dropped $1.36, or 1.8%, to $73.13 per barrel. U.S. crude futures for November delivery fell by $1.50, or 2%, to $69.50. The euro zone saw a sharper-than-expected contraction in business activity, with the services sector stagnating and manufacturing experiencing a deepening downturn.
Aluminum: Aluminum prices steadied after hitting a 10-day low , driven by technical weakness following last week’s rally, which was largely supported by the U.S. rate cut. However, strong import data from China, the world’s largest consumer, helped limit further declines. Copper has still gained over the last few weeks on lower Chinese inventories and the U.S. Federal Reserve’s jumbo interest-rate cut, market watchers say.
Yesterday’s price action
MCX gold futures settled +0.34% to 74295. Silver settled -1.00% to 89231. Copper settled -0.36% to 806.50. Crude oil -1.29% at 5898. Natural gas 6.81% to 216.50.
Major Economic Data and Event scheduled today – US CB Consumer Confidence
Bank of Australia
At 10.00am –Cash Rate. Data is foreseen at 4.35% from previous 4.35%.
Above data could have a positive impact on the Dollar.
Japan
BOJ Gov Ueda Speaks
Eurozone
At1.30 pm—German ifo Business Climate. Data is foreseen at 86.10 from previous 86.60.
At 2.30pm- Belgian NBB Business Climate. Data is foreseen at -12.3 from previous -12.6.
German Buba President Nagel Speaks
Above data could have a volatile impact on the Euro.
CANADA
At 10.40 pm- CBOC Gov Macklem Speaks.
Above data could have a mixed impact on the dollar.
U.S.
At 6.30pm –
S&P/CS Composite-20 HPI y/y. Data is foreseen at 5.9% from previous 6.5x%.
FOMC Member Bowman Speaks
HPI m/m. Data is foreseen at 0.2% from previous -0.1%.
At 7.30pm-
CB Consumer Confidence. Data is foreseen at 103.5 from the previous 103.3.
Richmond Manufacturing Index. Previous was at -19, forecast -17.
Above data could have a volatile impact on the dollar.
Happy Trading!
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