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One deal to bind them

One deal to bind them


UK construction PMI contracted further, to 43.3 in September; below the forecasts and the second-weakest reading since June 2009. The commercial sector continued it’s stark contraction due to political uncertainty and evaporating confidence. Overall business confidence remained weak and employment declined at a faster pace. 

A sceptical market awaited the reaction to the government’s revised Brexit plans and although the DUP backed the backstop the EU didn’t offer any positive rhetoric which limited positive Sterling moves. Irish Prime Minster Leo Varadkar stated that proposals don’t meet the agreed backstop objectives, so the markets will be looking to see whether negotiations continue over the next few days. 

The Pound settled close to 1.2300 on the Dollar and the Euro near 1.1235. Weak global risk appetite is limiting Sterling support this morning but political rhetoric will take precedence.


The New York ISM business conditions index declined to a 40-month low of 42.8 from 50.3, maintaining concerns over the outlook. The ADP data recorded an increase in private-sector payrolls of 135,000 for September, slightly below consensus forecasts of 140,000 and there was a notable downward revision for August to 157,000 from the 195,000 reported originally. According to ADP, businesses had turned more cautious, especially within the small-company sector.

The US announced that it would impose retaliatory tariffs on EU exports in response to alleged Airbus subsidies which reinforced fears over the global outlook and unsettled the Euro. The dollar remained subdued, however, and the single currency edged above 1.0950 with little change on Thursday ahead of the US ISM non-manufacturing data.



The Euro is currently trading at the 1.0950 against the Dollar as we begin the European session having already faced rejection near 1.0965 during the Asian trading hours.

The currency pair have picked up from the lows of 1.09 on Monday after weak US manufacturing data bolstered the US recession fears. The Euro also extended its recovery to levels above 1.0950 on Tuesday, courtesy of weaker than expected US ADP Employment data. 

Datawise today, Eurozone Services PMI are due for release shortly followed by PPI and retails sales later this morning. Directional bias will again be dependent on expectant figures hitting or missing targets. 


Data to watch

09.30 GBP – Services PMI

15.00 USD – ISM Non Manufacturing PMI

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