Markets Report - 04 October 2023

A daily breakdown of the markets for the 4th October 2023, provided to you by Sterlex.

🇪🇺💶Recent statements from ECB officials showed a complex situation with a primary decision to handle inflation. Eurozone appears to be adopting a wait-and-see approach regarding interest rate hikes from the European Central Bank (ECB). Services PMI improved to 50.3, exceeding the market consensus of 49.8. German Composite PMI showed a reading of 46.4, which was 46.2 prior. The upbeat Eurozone’s HCOB Purchase Manufacturing Index (PMI) could provide minor support for the Euro. The spot price trades higher around 1.0480 during the early European trading hours on Wednesday. The report revealed that the Composite PMI for September improved to 47.2 from the previous 47.1, which was expected to remain consistent. EUR/USD retraces the two-day losing streak, trading near a 10-month low marked on Tuesday.

🇬🇧💷The Pound Sterling (GBP) struggles for a firm footing despite a consistent sell-off in the past three months. Rising oil prices and supply chain disruptions could push the UK economy further on the backfoot. British producers have cut back on new orders and labor due to tepid demand. UK inflation is still more than thrice the target rate of 2%, and the Bank of England (BoE) feels discouraged about raising interest rates further due to deepening recession risks. After a more than year-long contraction spell in the Manufacturing PMI, the UK’s Services PMI is forecasted to remain below the 50.0 threshold for the second time in a row. The GBP/USD pair faces a ruthless sell-off as the United Kingdom economy muddles against the headwinds of poor economic prospects and sticky inflation.

🇺🇸 🏦The greenback, in terms of the USD Index (DXY), alternates gains with losses above the 107.00 mark so far on Wednesday. The index seems to have entered a consolidative phase around the area of 2023 tops beyond the 107.00 yardstick against the backdrop of further upside in US yields across the curve and a tepid improvement in the risk complex. In the meantime, the intense upside bias in the index was further underpinned by hawkish comments from Fed rate-setters and firm speculation of an extra rate hike by the Federal Reserve before the end of the year. Interesting session data-wise in the US will see the release of the weekly Mortgage Applications by MBA, the ADP report, final readings of the Services PMI, Factory Orders and the always-relevant ISM Services PMI.