ECONOMIC DATA, MONETARY POLICY IN THE SPOTLIGHT ON WEDNESDAY
A deluge of market-moving events will take the spotlight on Wednesday, with reports from both sides of the Atlantic set to be released.
Europe will see a deluge of PMI reports beginning at 07:15 GMT. Spain, Italy, France, Germany, United Kingdom and Eurozone are all expected to see final PMI numbers for the month of September. For the Eurozone, the PMI Composite Index is expected to read 56.7. Germany’s Composite index is forecast to read 57.8.
The European Commission’s statistical agency will also report on Eurozone retail sales at 10:00 GMT. Receipts at retail stores are forecast to rise 0.3% on month and 2.6% annually.
In North America, payrolls processor ADP Inc. will report on private sector job creation for the month of September. Private payrolls likely rose by 130,000 last month, based on a median estimate of economists. That follows a 237,000 gain the month before.
Later in the session, IHS Markit and the Institute for Supply Management (ISM) will release separate PMI indicators for the US services sector. Both reports are expected to show steady growth in services for the month of September.
On the monetary policy front, Federal Reserve Chairwoman Janet Yellen and European Central Bank (ECB) President Mario Draghi will each deliver speeches during the afternoon.
The US dollar index (DXY) was down 0.2% on Wednesday, giving up some of its recent gains. Dollar pairs will face heavy action in the coming days as investors turn their attention to US jobs data. The nonfarm payrolls report on Friday could elicit heavy volatility in the currency market.
The euro is back in recovery mode on Wednesday, as calm returned to the market following the Catalan independence vote. The EUR/USD exchange rate rose 0.2% to 1.1765 in Asian trading. The pair faces immediate support at 1.1696, which represents the daily low from 3 October. On the opposite side of the ledger, the bulls are eyeing 1.18 as a significant milestone.
The British pound rose against the dollar on Wednesday, although cable remains several hundred pips below last month’s high. The GBP/USD exchange rate rose 0.2% to 1.3262 in the Asian session. From a technical perspective, the pair has the support of the 1.3220 region. A break below that level would expose the 14 September low of 1.3146. On the opposite side of the spectrum, immediate resistance is seen at 1.3340.
The USD/JPY slammed on the breaks Wednesday, as the greenback paused following multiple rallies. The pair was down 0.2% in Asian trading, where it was seen consolidating in the low 112.60 region. The bulls retain control of the market, with investors expecting a more bullish push toward 113.80.