The dollar is exhibiting weakness and is trading close to session lows during the late European morning session. The flow of news is minimal, and significant portions of the US federal government continue to be inactive. China’s mainland markets are currently observing a holiday period. Among the G10 currencies, the Canadian dollar continues to underperform in a weak dollar scenario. Most emerging market currencies are exhibiting strength against the US dollar. The Argentine peso experienced a decline for the third consecutive session yesterday, following a rally that occurred every day last week. It concluded at its peak level since September 22 yesterday.

Gold demand remains strong and appears ready to test yesterday’s record high close to $3895. Equities are predominantly exhibiting strength today. Despite the mixed performance of Japanese markets, almost all other markets, excluding China and India—where trading is paused today—experienced a rally, with South Korea’s Kospi leading the charge with a 2.7% increase. Europe’s Stoxx 600 has increased approximately 0.75% following a notable 1.15% rise yesterday. The fifth consecutive gain has been achieved. US index futures navigated initial concerns regarding the government shutdown to finish higher yesterday and are currently exhibiting a stronger upward trend. Most benchmark 10-year rates in Europe are showing a downward trend, although the 10-year Gilt yield is exhibiting a slight increase.

The 10-year US Treasury yield stands just below 4.10%, positioned within the recent range’s midpoint. November WTI is currently positioned around $61.50. The price has remained relatively stable, not dipping significantly since it tested $61 in early September. The Dollar Index remains positioned above the (50%) retracement level of its gains following the Fed’s rate cut on September 17, which is situated around 97.40. The asset is exhibiting a gentle trading pattern, remaining within the range established yesterday, yet it continues to appear susceptible to fluctuations. The (61.8%) retracement is positioned just beneath 97.15. The Dollar Index has experienced a decline over the last four sessions, marking its longest losing streak since June. The prevailing sentiment is negative, and the unexpectedly disappointing ADP private sector jobs estimate, along with the downward revision to the August figures, has led to increased market confidence regarding another rate cut at the month’s end. The report indicated a decline in private sector employment for the second month in a row and the third month overall this year. The report appeared to align with other labor market data; however, it indicated that the majority of job losses in September stemmed from its periodic recalibration with data.

This adjustment led to a reported loss of 43k jobs when compared to the pre-benchmarked figures. However, it fails to clarify the downward revision that occurred in August. The final manufacturing PMI remained steady at the preliminary reading of 52.0, whereas the manufacturing ISM increased to 49.1 from 48.7, yet continues to fall below the 50 threshold since February. Prices paid decreased from 63.7 to 61.9; however, they remain elevated and are on an upward trajectory, albeit at a reduced rate. Employment improved to 45.3 from 43.8, yet it remains in a contraction phase. New orders, previously exceeding 50 in August (51.4, the highest since January), have declined to 48.9.