Market movers today
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Overall, we believe that PMI figures for the euro area for September due for release today will show a moderate improvement, reflecting an ongoing recovery. The order-inventory balance for the manufacturing PMI showed a promising increase in August, signalling an increase in manufacturing PMI in September despite a moderate decline in figures for August. However, we believe services PMIs have a more sluggish outlook for September.
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In the US, Markit and ISM PMIs declined in August but are sending mixed signals on the manufacturing sector. Most notably, the ISM index declined 3.2 index points and is now back below the 50 threshold again, suggesting a contraction in the manufacturing sector. We estimate the Markit PMI manufacturing index declined to 50.5 in September.
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Iran and Saudi Arabia are set to continue talks in Vienna. The two are trying to work out their differences in order for OPEC and Russia along with possibly also other major oil producing countries to agree on a strategy to stabilise the oil market next week in Algiers.
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We are due to publish updated quarterly forecasts for the Nordic economies in our Nordic Outlook at 9:00 CET. The Outlook will not contain any new financial forecasts.
Selected market news
As expected, Norges Bank (NB) yesterday left the sight deposit rate unchanged at 0.50%. The revised rate path suggests a 40% probability of a later rate cut, which was very close to our expectations. Meanwhile, NB signalled that the bottom in the revised rate path is first reached in Q2 17, which was less aggressive than we had pencilled in. Also, the rhetoric in the Monetary Policy Report (MPR) was more hawkish than expected, highlighting the Board’s move towards a ‘neutral’ bias. Specifically, NB stated that ‘the outlook suggests that the key policy rate will most likely remain at today’s level in the period ahead” and that “…the forecast implies a slightly higher probability of a decrease than an increase in the key policy rate in the year ahead’. Prior to the decision, markets had priced in around a 5-10% probability of a rate cut today. Post the decision, short-term rates have risen with markets pricing out the likelihood of a 2017 cut. As expected, EUR/NOK initially dropped on the announcement but the more hawkishthan- expected rhetoric also meant that we did not get the expected rebound in the cross. Given our economic forecasts and NB’s gradual move towards a ‘neutral’ bias today, we expect NB to leave the sight deposit rate unchanged throughout 2017.
Yesterday, Saudi Arabia and Iran met in Vienna to discuss possible ways to stabilise the oil market ahead of the producers meeting in Algiers next week. In April, talks over a deal to freeze production failed because Iran refused to corporate. However, since then, Iran has been able to push its crude production back up the level it was at before sanctions were imposed on Iran in 2012 – sanctions that were removed in January this year. Hence, Iran may be more inclined to agree to freeze production. Nevertheless, an agreement to freeze production would not achieve more than to preserve status quo in the oil market.
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Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
![EUR/USD stays in positive territory above 1.0850 after US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-euro-and-dollar-banknotes-17371247_XtraSmall.jpg)
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
![GBP/USD stabilizes above 1.2850 as risk mood improves](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/strong-pound-weak-dollar-17536259_XtraSmall.jpg)
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
![Gold rebounds above $2,380 as US yields stretch lower](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-gm187363896-28836378_XtraSmall.jpg)
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
![Avalanche price sets for a rally following retest of key support level](https://editorial.fxstreet.com/images/Avalanche/Avalanche_XtraSmall.jpg)
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
![The election, Trump's Dollar policy, and the future of the Yen](https://editorial.fxstreet.com/images/Macroeconomics/Events/US%20Elections/Donald_Trump_closeup_XtraSmall.jpg)
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.
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