USD
As expected, a rebound in yesterday’s ISM manufacturing figures helped the broad dollar to close out trading up on the day. Significantly, the employment sub-index climbed from 43.4 to 46.0 to leave last month’s collapse in the reading looking distinctly idiosyncratic. However, it is yesterday’s grim session for equities that will likely capture the attention of many this morning. The Nasdaq shed -3.26%, led by a sharp selloff in tech stocks, while the S&P 500 also finished the day down by over 2%. While the move lower for stocks has continued overnight, with Asian equities also posting losses, for now the passthrough to currencies looks limited, despite these moves echoing the early August selloff that roiled FX markets. Even so, traders are likely to spend the day nervously eying stock markets ahead of US trade data, factory orders, JOLTs jobs openings, and a BoC rate decision, all due this afternoon.
EUR
Another quiet day looks to be in store for euro traders, coming after the single currency gave up 0.25% to the greenback yesterday in the face of a broad dollar rally. Final PMIs and eurozone PPI are the key events of note this morning, though neither is likely to be market-moving, while a speech by the Bank of France Governor Villeroy is also unlikely to hold much new information for traders. All told then, this should see the dollar remain in the driving seat for EURUSD price action.
GBP
With little domestic news to drive FX markets, sterling once again traded in line with other G10 currencies on Tuesday. While that meant a modest retracement lower against the dollar, GBPEUR ended the session close to unchanged, reflecting the lack of market-moving data. Today looks unlikely to be much different. Final PMI readings should prove a non-event for the pound, while the docket of speakers is blank. Instead, sterling traders will have to look toward cross-asset conditions and tomorrow’s Decision Maker Panel release as the next potential catalysts for the pound.
CAD
A BoC rate decision should be the main event for loonie traders today, with an announcement due at 14:45 BST. Anything other than a 25bp cut would be a major surprise. Instead, all attention will be on any forward guidance offered by Governor Macklem and the Governing Council. Our base case, and that of markets, looks for a series of further 25bp cuts over the coming meetings. A signal that a pause may be considered would be seen as hawkish when set against such expectations. That said, suggestions favouring an acceleration look more on balance based on the weakness in underlying Canadian data, leaving risks for USDCAD skewed to the upside this afternoon.
