3 Oct 2013
European open: Letta confidence helps to shift focus back to US political worries
FXstreet.com (London) - The second day of the partial US government shutdown, with no resolution in sight, began to introduce some nervousness into the markets - the S&P fell slightly, a drop off from its rally into the shutdown.
Due to the shutdown of non-essential government services, non-farm payroll numbers will not be released on Friday. Instead, focus was on the privately-compiled ADP report, which showed weaker than expect new jobs, at +160k.
The Yen took a hit against the dollar overnight following Prime Minister’s Shinzo Abe’s confirmation that a sales tax hike to 8 percent, up from 5 percent, would be introduced in April 2014. Despite the JPY5 trillion stimulus sweetener proposed, including cash hand-outs to low-income families, USD/JPY slid to JPY97.7800 while the Nikkei lost 2.2 percent.
The Kiwi dollar surged on views expressed by Reserve Bank of New Zealand Governor Greame Wheeler’s comments that said he would raise interest rates more aggressively if mortgage lending limits don't curb house-price inflation. Wheeler said that the RBNZ expects to increase the 2.5 percent cash rate by 2 percent from 2014 to the beginning of 2016 but is prepared to make larger increases should loan-to-value limit measures fail to slow house price inflation. NZD/USD climbed to a high of USD0.8340.
The success of Italian Prime Minister Letta in yesterday’s confidence vote helped to give some political stability to the largest bond market in the Eurozone. Italian 10-year yields fell slightly to 4.37.
Today sees the final Eurozone services PMIs for September. The flash estimate showed the overall EZ index rising to its highest level since June 2011.
Initial claims data releases will go ahead in the US, where it is expected that we will see a consensus miss, below the expected 315k. PMI numbers are expected to see similar disappointment for non-manufacturing data. All other data releases have been cancelled due to the government shutdown.
Due to the shutdown of non-essential government services, non-farm payroll numbers will not be released on Friday. Instead, focus was on the privately-compiled ADP report, which showed weaker than expect new jobs, at +160k.
The Yen took a hit against the dollar overnight following Prime Minister’s Shinzo Abe’s confirmation that a sales tax hike to 8 percent, up from 5 percent, would be introduced in April 2014. Despite the JPY5 trillion stimulus sweetener proposed, including cash hand-outs to low-income families, USD/JPY slid to JPY97.7800 while the Nikkei lost 2.2 percent.
The Kiwi dollar surged on views expressed by Reserve Bank of New Zealand Governor Greame Wheeler’s comments that said he would raise interest rates more aggressively if mortgage lending limits don't curb house-price inflation. Wheeler said that the RBNZ expects to increase the 2.5 percent cash rate by 2 percent from 2014 to the beginning of 2016 but is prepared to make larger increases should loan-to-value limit measures fail to slow house price inflation. NZD/USD climbed to a high of USD0.8340.
The success of Italian Prime Minister Letta in yesterday’s confidence vote helped to give some political stability to the largest bond market in the Eurozone. Italian 10-year yields fell slightly to 4.37.
Today sees the final Eurozone services PMIs for September. The flash estimate showed the overall EZ index rising to its highest level since June 2011.
Initial claims data releases will go ahead in the US, where it is expected that we will see a consensus miss, below the expected 315k. PMI numbers are expected to see similar disappointment for non-manufacturing data. All other data releases have been cancelled due to the government shutdown.