Not long before the session-end, the dollar index shot higher against its peers, reversing daily losses after the ISM non-manufacturing PMI readings for the month of September posted the highest mark since August 2015. The index surged by 4.5 points to 59.8, whilst projections were for a smaller increase to 55.5. New orders, employment and price PMI indices within the services industry also touched fresh highs, with prices surging the most in five years. The Markit equivalent also came in better than expected, with the composite PMI arriving at a two-year high of 51.1.
Earlier, the ADP national employment report indicated that 135,000 private jobs were added to the economy in September, surpassing the forecast of 125,000 but falling below August’s downwardly revised mark of 228,000. This comes ahead of the nonfarm payrolls reading to be released on Friday.
Even though news of a less hawkish Fed chair candidate (specifically, Jerome Powell) being preferred by the US Treasury Secretary Steven Mnuchin made traders scratch their heads and pressured the dollar index near the 93-key level, the release of upbeat non-manufacturing PMI numbers lifted the index back to 93.51. Dollar/yen jumped to an intra-day high of 112.89 before falling to 112.71. Gold fell from a five-day high of $1,281.45 per ounce to $1,270.49, being 0.20% up on the day.
Later in the day, investors will eye a speech given by the Fed chairwoman, Janet Yellen, at the Community Banking in the 21st Century Conference in St. Louis.
The pound gained some ground against the dollar, picking up to an intra-day high of $1.3287 following the release of better-than-expected Markit services PMI numbers for the month of September. The sector’s index edged up to 53.6, while forecasts were for the index to remain steady at August’s level of 53.2.
Final Markit services PMI readings out of the Eurozone also surprised analysts to the upside, rising by 1.1 points to a four-month high of 55.8 in September compared to the expected 55.6. The region’s composite PMI figure also climbed to a four-month high, gaining 1 point and rising to 56.7 as expected. However, a few hours later, August’s retail sales out of the region disappointed analysts after the numbers showed that yearly retail sales fell from the downwardly revised 2.3% to 1.2% instead of growing by 2.6%. This was also the lowest growth seen since February.
Meanwhile, in Catalonia, a government official said that regional parties who are in favor of independence and hold most seats in the Catalan parliament have asked for a debate and a vote on breaking away from Spain on Monday.
Euro/dollar gave up gains in the wake of the US PMI data, falling to 1.1760. Nevertheless, it remained 0.14% up on the day. Euro/pound dropped by 0.16% to 0.8858.
In Moscow, an energy forum attended by several OPEC energy ministers and the Russian President, Vladimir Putin, boosted confidence on longer oil supply cuts after Putin said that the OPEC/non-OPEC deal on production cuts could be extended “at least until the end of 2018”.
The Energy Information Administration’s report on US crude oil inventories showed stockpiles falling by 6.02 million barrels in the week ending September 29, a much bigger drawdown than the expected 0.76m and the preceding week’s reduction by 1.85m barrels. Gasoline inventories over the same period grew faster than expected though, rising by 1.64m barrels as opposed to the anticipated 1.09m. WTI jumped higher within the first few minutes of data release with Brent crude also recording gains. The former last traded 0.3% up on the day, at $50.57 per barrel. Brent was 0.1% higher at $56.04 a barrel.
Dollar/loonie rebounded during the session, rising from a five-day low of 1.2449 to 1.2479 after the EIA report.