Tumbling equities and softer yields indicate a risk-off session. The US dollar, however, is predominantly stronger. In the context of G10 currencies, it required an additional round of verbal intervention and declining Treasury yields to enable the yen to withstand the dollar’s influence. Approximately 50% of currencies have declined by 0.5% or more, with the majority continuing to experience recent losses. Most emerging market currencies are experiencing declines, with the Mexican peso, often viewed as a proxy for constrained currencies, particularly in Latin America, down nearly 0.75%, leading the complex lower.

All the major markets in the Asia Pacific region experienced sell-offs today. The Nikkei experienced a decline of 1.75%, whereas South Korea’s Kospi led the region with a nearly 2.4% drop. Europe’s Stoxx 600 has experienced a significant decline of 1.5%, marking its largest drop since August 1. US S&P and Nasdaq futures are down over 1% and appear set for a lower opening gap. In Europe, benchmark 10-year yields have experienced a slight decline, with the UK Gilt yield decreasing by nearly two basis points, marking the most significant drop in the region. The 10-year US Treasury yield has decreased by slightly more than two basis points, now falling below 4.09%. Gold is experiencing subdued trading within the range established yesterday, currently down by just under $10 during the late European morning session. December WTI encountered resistance at $61.50 yesterday and is currently testing the $60 level.

The current US federal government shutdown has reached a historic length, tying for the longest duration on record, with no indications of compromise from either party at this time. The scarcity of government data persists, and consequently, the collection process remains ongoing. Tomorrow will present the ADP private sector jobs estimate along with the ISM services report. The futures market is currently pricing in approximately a 66% probability of a rate cut occurring next month. The Dollar Index, following a four-day rally, is testing the August 1 high around 100.25. The 200-day moving average stands at approximately 100.40, and the DXY has not surpassed this level since early March. A shelf seems to have been established in the 99.70 region.

The euro has declined for the fifth consecutive session. The $1.15-level has been tested for the first time since August 1. For the second consecutive session, the euro closed beneath its lower Bollinger Band, which is positioned just above $1.1510 today. Options are available for 1.1 billion euros at a rate of $1.1525, set to expire today. A decisive breach of $1.1500 presents minimal resistance on the charts, paving the way for a potential decline towards the lows observed at the end of July and early August, specifically in the $1.1390-$1.1400 range. The economic calendar is set to gain momentum tomorrow with the release of the final services and composite PMI, alongside German factory orders and French industrial output.