Written by Steven Dooley, Head of Market Insights
Global overview
The USD was lower as US ten-year bond yields saw a sharp reversal. The euro and British pound were the best performers. All eyes now turn to the release of PMI numbers from across the world with the US PMIs likely to draw the most attention.
Greenback hit after sharp reversal in bond yields
The greenback fell overnight after another volatile session in bond markets with the benchmark ten-year bond yield reaching 5.00% for the first time since 2007 before later reversing sharply lower.
The reversal caused the US dollar to fall with the biggest losses versus European currencies.
However, in Asia, the USD’s losses were contained, with worries about the global economy still front-and-centre ahead of today’s key purchasing manager index (PMI) numbers.
The AUD/USD gained 0.4% while the NZD/USD fell 0.3%.
The USD/SGD fell 0.4%. The USD/CNH was down 0.2%. The USD/JPY was broadly flat.
Euro outperforms
The euro was the best performer with the EUR/USD up 0.7% overnight. The market anticipates a slight increase in the Eurozone composite PMI, mostly due to improved manufacturing, while services are still struggling but aren’t getting any worse. PMIs for Germany and France will also be announced.
The British pound was also stronger with the GBP/USD up 0.6%. The market anticipates that the UK services index will slightly increase from 49.3 to 49.5, while the UK manufacturing index will stay considerably below 50 at 45.
Overall, the UK headline composite PMI is likely to rise from 48.5 to 48.8, as polled by Reuters.
US PMIs in focus
The main focus overnight will be US PMIs. Based on recent regional Fed surveys, the S&P manufacturing PMI is likely to stay in contractionary territory. The reading is anticipated by the market to be 49.5 (September: 49.8). Although orders for durable goods and industrial output have increased recently, survey results have continuously lagged behind these measures.
The S&P services PMI is probably going to stay in expansionary territory given the recent strength of other national surveys. However, there is further downside risk because to poor regional Fed surveys and the Beige Book. On the other hand, the market predicts the reading will be 49.9 (September: 50.1).
Greenback, bond yields turn
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 23 – 28 October
All times AEDT
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
