Fresh signs of slowing economic growth in the US and broadening global trade frictions soured investor appetite further, pushing the Dollar to fresh one-week lows against the Euro.
The greenback fell by 0.3 per cent overnight after private employment data showed hiring cooled in September, which is the latest indicator that the Sino-US trade dispute is hurting the world’s largest economy.
The US currency remained under pressure in early trade, while stocks have tumbled as investors grapple with the deepening global economic gloom, which is having a negative impact on the US.
Consumer spending has so far been strong, supported by dynamic labour market and rising wages. However, if we see a decline in consumer confidence, more alarm bells will sound.
Releases to watch
Attention will now turn to US non-manufacturing ISM survey for September due at 14:00 (GMT) today and US jobs data on Friday, which should provide a fuller picture of the health of the US economy.
Futures pricing indicated a 73 per cent chance, up from about 60 per cent just a day earlier, that the Federal Reserve will drop the benchmark interest rate to support the economy at its meeting later this month. But this has not been enough to drive a flight from the Dollar, which is also widely seen as a safety bet at times of economic or political uncertainty.
Meanwhile, the US yesterday, 2 October approved tariffs on $7.5 billion’s worth of European goods following illegal subsidies handed to Airbus, threatening to trigger a transatlantic trade war.
The Pound was steady at $1.2304, having fluctuated in a tight range as British Prime Minister Boris Johnson proposed an all-island regulatory zone in Ireland in his final pitch for a Brexit deal before the 31 October deadline.
However, the outlook for Sterling remains uncertain after Brussels gave a cool response to the proposal, leaving a no-deal exit from the European Union at the end of the month a real possibility.
While the UK government’s official proposals to replace the Northern Irish backstop received backing from Northern Ireland’s Democratic Unionist Party (DUP), there was little positive rhetoric. Irish Prime Minister Leo Varadkar stated that proposals did not fully meet the agreed backstop objectives, but the key will be whether or not negotiations will continue over the next few days.
Fears of US recession grow as manufacturing slumps
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