Headlines:
- Euro pressured lower as traders step up ECB rate cut odds for October
- France September flash services PMI 48.3 vs 52.5 expected
- Germany September flash manufacturing PMI 40.3 vs 42.4 expected
- Eurozone September flash services PMI 50.5 vs 52.1 expected
- UK September flash services PMI 52.8 vs 53.5 expected
- UK September CBI trends total orders -35 vs -21 expected
- Weekly update on interest rate expectations
- Fed's Kashkari: 50 bps rate cut was the right decision
Markets:
- AUD leads, EUR lags on the day
- European equities mixed; S&P 500 futures up 0.1%
- US 10-year yields up 2.3 bps to 3.750%
- Gold flat at $2,622.69
- WTI crude up 0.4% to $71.31
- Bitcoin down 0.1% to $63,489
The focus of the session was on PMI releases in Europe and it did trigger a modest reaction in markets.
Coming into today, traders were pricing in ~61% odds of an ECB rate cut for October but stepped that up to ~80% now. That of course coming after poor PMI prints in both France and Germany, which also highlighted a softening of price pressures.
EUR/USD fell from 1.1145 to a low of 1.1083 before recovering some ground back to 1.1120 now, still down 0.4% on the day.
That comes as euro area bond yields fall with market players stepping up calls for the ECB to cut rates next month.
US futures also briefly slid into negative territory from the data releases but are now holding marginally higher on the day. European equities remain more mixed in general.
Looking to other major currencies, GBP/USD did fall alongside the euro to 1.3250 before recovering back some ground to 1.3315 now - near flat on the day. Meanwhile, USD/JPY is seeing an up and down day with the pair trading up to 144.45 in early Asia trading before being down by 0.3% now to 143.50.
The dollar is trading more mixed but only marginally lower at the balance, if not for the euro's plunge. This comes as Treasuries are not offering all too much to start the new week. 2-year yields are still pressured near the 2023 low near 3.55%, seen currently at 3.57%. Then, we have 10-year yields sitting higher closer to 3.75% on the day.
It's now over to the US session where we will also be getting the US PMI data. So, let's see how that plays into the post-Fed picture.
