The US dollar is experiencing a slight decline, yet remains within the trading ranges established yesterday. The recent surge in Japanese unemployment has negatively impacted the yen, making it the sole G10 currency that is not appreciating against the dollar today. The weakened greenback indicates that the Canadian dollar is probably under-performing, showing only slight improvement for the day. Sterling ranks as the next weakest currency after the final September composite PMI reading, which dipped to just above the 50 boom/bust threshold.
Most emerging market currencies are exhibiting strength. This week, the JP Morgan and MSCI emerging market currency indices have increased by 0.2% to 0.3%. Equities are trending upward. In the Asia Pacific region, only Hong Kong among the major exchanges experienced a decline. Japan’s major indices experienced an increase of over 1%. Taiwan is resisting US pressure to relocate half of its chip manufacturing capacity to the US; however, stocks experienced a rally of 1.45% today, contributing to approximately half of this week’s overall gains. Today, South Korea’s Kospi experienced a notable rally of 2.7%, contributing to a weekly increase of 2.25%. Europe’s Stoxx 600 has recorded an increase for the sixth consecutive session. The nearly 2.8% rally this week marks the highest increase in five months. US index futures are exhibiting an upward trend in trading.
Benchmark In Europe, 10-year yields are showing a slight variation, with the exception of the 10-year Gilt, which has decreased by a few basis points. The 10-year US Treasury yield has increased by one basis point to 4.09%, positioning itself approximately at the midpoint of the recent range. Gold remains stable, though it has retreated from the record high established yesterday at approximately $3897. The trend shows an increase for the seventh consecutive week. November WTI has shown signs of stabilization following a decline of over 2% yesterday, nearing a four-month low close to $60.
The Dollar Index reversed its four-day decline yesterday, having retraced nearly half of the gains from the post-Fed rally. The value approached 98.15 yesterday, marking a three-day peak. Monday’s peak reached approximately 98.20. Today, there has been a lack of follow-through buying. The asset has remained under 98.00, reaching a session low close to 97.70 during the European trading hours. The September employment report is expected to be the focal point of the day; however, the ongoing government shutdown is persistently hindering the dissemination of economic reports. Nonetheless, it appears to be an overstatement to assert that the Fed (and investors) are “flying blind”. The utilization of private sector data has expanded, encompassing metrics such as corrugated cardboard orders, train car loadings, and holiday wrapping paper sales.
The PMI/ISM, ADP, Boeing orders, auto sales, Challenger job cuts, and house prices represent key indicators derived from private sector data. Numerous regional Federal Reserve surveys are monitored by policymakers and investors, and these should remain unaffected by the political stalemate in Washington. Today, we have the final services and composite PMI as well as the ISM services data scheduled for release. The preliminary PMI indicated a deceleration in services and composite output, registering at 53.9 and 53.6, marking both as three-month lows. The ISM services index is projected to decline to 51.7 from its previous level of 52.0. The employment sub-index has remained at 50 since June.