S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
ING’s FX Strategist Francesco Pesole notes improved Gulf-related risk sentiment has weighed slightly on the Dollar, but stable Federal Reserve rate expectations remain supportive. With US payrolls due tomorrow, he argues that caution in markets and limited changes in Fed pricing should keep the Dollar in a broad range, even as data and Fed communication outweigh moves in Oil and geopolitical headlines.
Risk-on tone but range-bound dollar
“News of a deal between Iran and Oman to open a safe shipping route in the Strait of Hormuz has kept the FX market in risk-on mode, favouring a rotation from the dollar to higher-beta currencies. Even so, G10 moves have been contained this week, likely because tomorrow’s US payrolls report remains the key catalyst and a notoriously difficult one to predict.”
“Expectations for upcoming Fed meetings are little changed since July’s announcement, with 14-17bp consistently priced for September and 30-35bp for December. This has come during a week in which Brent fell $15/bbl: a clear testament that US rate expectations are currently being driven far more by data and Fed communication than by energy prices.”
“Speaking of data, ADP payrolls came in a bit soft at 44k and ISM services rose less than expected to 54.1 yesterday. The services employment subindex plummeted to 47.5, which – according to our macro team – points to some mild downside risks for tomorrow’s payrolls.”
“Markets are also waiting for the next headlines on US-Iran negotiations. There appears to be little pessimism left in FX markets, and positive headlines on that topic may not generate sustainable USD weakness. With payrolls looming tomorrow, a wait-and-see stance may keep volatility contained and the dollar broadly range-bound.”
