FX Today: Final PMIs in Europe and the US come to the fore

Pablo Piovano FXStreet

The US Dollar (USD) partially reversed its multi-day leg lower on Thursday, as the US government shutdown continued to weigh on investors’ sentiment, while the absence of data releases should leave traders focused on US politics as well as geopolitics.

Here’s what to watch on Friday, October 3:

The US Dollar Index (DXY) regained some composure following four consecutive daily retracements on Thursday. Meanwhile, sentiment remained dented by the current uncertainty surrounding the US federal government shutdown. The ongoing vacuum of US data releases is expected to affect September’s Nonfarm Payrolls and the Unemployment Rate, while the ISM Services PMI, and the final S&P Global Services PMI should be published as usual.

EUR/USD added to Wednesday’s hiccup and flirted with weekly troughs near the 1.1700 neighbourhood. The final HCOB Services PMI in Germany and the eurozone are due, followed by Producer Prices in the bloc.

GBP/USD came under pressure following the Dollar’s rebound, flirting with three-day lows near the 1.3410 area. The final S&P Global Services PMI will wrap the weekly calendar.

USD/JPY set aside four daily declines in a row and managed to pick up some fresh demand following a test of the 146.60-146.50 band, where its temporary 100-day SMA also sits. Next on tap on the Japanese calendar will be the final S&P Global Services PMI.

The renewed selling pressure prompted AUD/USD to once again break below the 0.6600 support and reach two-day lows near 0.6580 on Thursday. The final S&P Global Services PMI is due in Oz at the end of the week.

There was no respite for the downward trend in prices of WTI on Thursday, falling to new five-month lows after breaching below the $61.00 mark per barrel. The move higher this time came in response to extra oversupply concerns.

Gold prices flirted with record highs just ahead of the $3,900 mark per troy ounce before receding to two-day lows near $3,830. The precious metal’s correction came on the back of the marked resurgence of the buying interest in the US Dollar and higher yields, although uncertainty around the US government shutdown should cap the downside for now. Silver prices came closer to weekly lows after hitting fresh tops above the $48.00 mark per ounce

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD holds range below mid-1.3600s amid Fed risks and Iran tensions

The GBP/USD pair extends its sideways consolidative price move for the second straight day, and trades around the 1.3630 area during the Asian session. The US Dollar is looking to build on its modest recovery from the lowest level since May 14, and is acting as a headwind for the currency pair. The lack of follow-through selling warrants some caution for bearish traders.

EUR/USD gains support amid hawkish ECB expectations, subdued US Dollar

EUR/USD inches higher after posting minor losses in the previous day, trading around 1.1670 during the Asian hours. The pair finds support as rising oil prices, elevated bond yields, and escalating Middle East tensions drive Eurozone inflation concerns. These factors have boosted expectations for a more hawkish stance from the European Central Bank, which is widely anticipated to deliver a 25-basis-point rate hike in September.

$4700 tested as Gold pulls back but bullish potential remains intact

Gold has pulled back sharply from fresh 15-week highs of $4,697, snapping a two-day uptrend in Asia on Tuesday. The US Dollar (USD) holds onto recovery gains, capping further upside in the bullion.

Bitcoin tops $80,000 as US Treasury fights high yields – AERO, VIRTUAL rally

Bitcoin extends gains above $80,000 as broader market risk-on sentiment persists. The scarce asset could extend its rally as the US Treasury combats high yields in the long-dated bond market, with further interventions on the horizon. Aerodrome Finance (AERO) and Virtuals Protocol (VIRTUAL) emerged as top performers over the last 24 hours.

The forex market is switching to a ‘debasement trade’

The US dollar has stabilised near three-month lows thanks to a rapid recovery in Treasury bond yields. Yields on 30-year bonds are returning to the levels seen following the Treasury’s announcement that it was increasing the minimum purchase volume to $4 billion. The greenback got support from falling stock indices, the continued rally in Brent crude, and positive signals from the US economy.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.