Market Drivers October 2, 2019
Risk-off in markets
BoJo puts an ultimatum to EU
Nikkei -0.49% Dax -1.078%
UST 10Y 1.63%
Oil $53/bbl
Gold $1483/oz
BTCUSD $8284

Europe and Asia:
No data

North America:
USD ADP 8:15

A clear risk-off pall hit the currency market today with both Asian and European equity bourses in the red on concerns over global growth.

Yesterday’s very weak US ISM manufacturing number shocked the market and sent US equities lower as the data showed the worst performance for the sector since the Great Recession.

Up to now, the markets have been operating on the decoupling theory assuming that US growth would pick up in H2 of this year and diverge from the slowdown in Europe and Asia. However, yesterday’s data makes clear that slowdown in demand is now fully global and the US may see a further deceleration in months ahead.

Today’s ADP data may provide a clue to the strength of employment demand in the US economy, but the market will really focus on tomorrow ISM Non-Manufacturing report which not only provides the best forecast for monthly Non-Farm payrolls figures due Friday but also will show the state of the service sector which makes up more than 70% of the US economy.

If tomorrow’s ISM data also misses its mark the sell-off in risk is likely to accelerate hard with USDJPY potentially falling to the 107.00 level before the end of the week. For now, however, FX majors will likely remain within ranges with USDJPY testing 107.50 support while EURUSD tests the 1,0900 level once again as markets try to determine just how severe the global slowdown has become.