US ADP Employment Data Support Taper – Eyes Now On Friday’s Numbers
US Businesses Add The Most Jobs In Three Months
US lawmakers are nearing an agreement to raise the debt ceiling following negotiation in the Senate on Wednesday. US Treasury secretary, Janet Yellen, attended negotiations between Democrats and Republicans as she warned that the US risks reaching its ceiling by 18 October. The Senate’s top Republican, Mitch McConnell, offered to support the extension to avoid a potentially damaging and self-inflicted US debt default.
It was a relatively quiet day on Wednesday in terms of data releases with surging energy prices and expectations that the Federal Reserve (Fed) will begin tapering, supporting the Dollar.
Meanwhile, the ADP report showed businesses added the most jobs in three months ahead of Friday’s September Payroll and employment data.
Sterling Remains Fragile On Stagflation Fears
The only economic release from the UK yesterday was the PMI Construction. The headline figure fell to an eight-month low from 55.2 in August to 52.6 in September; this was also below expectations. Rising prices, supply chain disruption and staff shortages put the brakes on the recovery of Britain’s construction sector. Sterling was on the back foot against the Dollar, not only due to the softer data but also due to the concerns of stagflation given the rising energy costs. This morning we had the Halifax house price index released. UK house prices hit another all-time high in September, rising sharply as the stamp duty holiday taper ended. According to the Halifax monthly house price index, prices rose by 1.7% in September, adding more than £4,400 to the value of the average property.
Looking to the day ahead, it is fairly quiet with no major data set release. The market is likely to focus on the US employment data that is set for release tomorrow.
Putin Offers Additional Gas Supply To Support EU Region
It is becoming ever more evident that surging energy prices are proving to be particularly problematic for the Euro, but markets may take some comfort from President Putin’s offer of additional gas supply to the bloc. The additional supply should naturally stabilise increasing global energy prices which are threatening industrial activity across Europe, and beyond. Before Mr Putin’s comments, European natural gas prices were reading 10 times the level seen at the start of the calendar year.
Looking ahead at today, we have several European Central Bank (ECB) speakers, including Schnabel and Lane, which could drive some interest from currency markets. In addition, the ECB minutes from the September policy meeting are released this afternoon. Already released this morning was German Industrial production data which showed a fall in output by 4.0% versus a -0.4% forecast. It doesn’t appear as though the surprise reading has provided much movement for the Euro yet.
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