Deutsche Bank analysts point out that for the US economy, the warning signs that we got from the Chicago PMI data on Monday turned out to be correct with yesterday’s shocking ISM manufacturing print being the talk of the town in markets.
“The headline was the decade-low September print of 47.8, a 1.3pt decline from August and also well below expectations for a 50.0 reading. In fact it was below even the lowest economist’s forecast on Bloomberg.”
“The details were arguably even more concerning though. New orders (47.3 vs. 47.2 previously), employment (46.3 vs. 47.4) and production (47.3 vs. 49.5) all either remained soft or deteriorated further. Only 3 of the 18 industries in the survey reported growth, the lowest figure since 2009.”
“In addition, the leading indicator new exports component slumped to 41.0. The last time it was lower was during the depths of the GFC in March 2009, and if we look at the full 380 months’ of history, this index has only been lower than it is right now on 6 occasions.”
EUR/USD is trading around 1.0950 after ADP NFP missed with 135K jobs gained in September and a downward revision for August. The figure joins other misses and weighs on sentiment.
GBP/USD is rising above 1.2300. PM Johnson has laid down a detailed Brexit plan that the DUP supports. The EU is set to react to the proposal later today.
Tuesday’s dismal US ISM PMI weighed on the USD and prompted some long-unwinding trade. A modest uptick in the US bond yields extended some support to the USD on Wednesday. Traders look forward to US ADP report for some short-term impetus ahead of Friday’s NFP.
Following its pullback from early-August lows, Gold prices fail to remain strong as buyers await fresh signals of recent risk aversion. The yellow metal presently declines to $1,476.16 ahead of the European open on Wednesday.
The purchasing managers’ index from the Institute for Supply Management (ISM) turned in a 47.8 score for September, the lowest this gauge has been since June 2009.
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