Sterling’s loss is always going to be the dollar’s gain, which is an obvious testament to how interlinked everything is on these here currency markets. Dollar weakness has been a feature of the markets in recent times, but it wasn’t the case on Friday as fears over a no-deal Brexit overtook any lingering trade war worries there might have been. The US and China have not quite imposed the tariffs we feared which has helped ease fears a little (although this gives them more room for further tariffs in the future). Let’s remember: there is a finite amount of goods that can have tariffs imposed on them, so far better to roll them out at a slower pace. That is, if the two sides really do want a tit-for-tat battle.
The only releases from the US on Friday were the composite, manufacturing and services PMI readings for September, which were all expected to come in at around 55.0 (from 54.7, 54.7 and 54.8 the previous month). However, they actually came in at 53.4, 55.6 and 52.9 – unlike Germany, the eurozone and the UK, services disappointed. However, as they are only flash readings they will likely be adjusted in due course.
It is a quiet start to the week for US economic data, but with Trump at the helm there isn’t really ever a quiet day. On Wednesday we will see the Federal Reserve’s interest rate decision, as well as new home sales and economic projections from the Federal Open Market Committee.
