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Pseudo-referendum starts today

Pseudo-referendum starts today


UK services PMI printed slightly above forecast at 50.0 for October, up from 49.5 in September. The report also showed export orders, order backlogs, new business and employment continued to decline as political uncertainty continued to sap confidence. Confidence in the services outlook strengthened to a 3-month high but the Pound failed to muster significant support from the data. The Euro finally moved above the 1.1630 support area which triggered further selling and a decline towards 1.1650. The Pound drifted lower against a stronger Dollar to below 1.2900. Boris Johnson is expected to formally announce the general election later today as markets await developments to drive positioning.


The September US trade deficit declined to a 5-month low of $52.5bn from $55.0bn in August as the US recorded an oil surplus for the first time since 1978, although there was still a net deficit increase for the first 9 months of 2019. The final US PMI services-sector index declined to 50.6 from the flash reading of 51.0 and the weakest reading since February 2016 while employment declined at the fastest pace for close to 10 years. In contrast, the ISM non-manufacturing index increased to 54.7 for October from 52.6 and above consensus forecasts of 53.5. Business activity strengthened to 57.0 from 55.2 and new orders also increased at a faster pace. Employment increased, but order backlogs declined.

Atlanta Federal Reserve (Fed) President Barkin stated that now was a good time to take a pause in interest rate cuts and assess how the economy evolves. He also repeated the line that the central bank will reassess the monetary policy outlook if there is a material change to the outlook. The latest New York Fed survey recorded a decline in consumer inflation expectations to the lowest level since 2013 which will cause some unease within the central bank.




The Euro is struggling for direction as we start Wednesday’s trading session around the 1.1075 region. After a negative start of the week, the pair appears to have met some support at the 1.1070. The improved mood is in response to the positive developments from the US-China trade front and has given the Dollar an extra umph via higher yields and persistent outflows from the safe havens.

Datawise in Euroland today, we have final Services PMIs due for release alongside Retail Sales in the broader Euro area both of which are not major events so may do little to move the currency.



Data to watch

13:00  USD – FOMC Member Evans Speaks

15:30  USD – Crude Oil Inventories

18:00  USD – 10-y Bond Auction 

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