MORNING OVERVIEW
Market participants may be looking forward to the release of the US PMI figures, which are set to be released later on today. However, during the early European session, France’s services PMI figure, Germany’s manufacturing PMI figure and the Zone’s composite figure were released, which could increase market interest for the EUR
MARKET SNAPSHOT
| MARKET | CURRENT | CHANGE | COMMENT |
| S&P 500 | 7761 | -0.04% | Companies received upgraded valuations |
| DXY | 100.487 | +0.06% | FOMC speakers |
| EUR/USD | 1.1456 | -0.07% | EU consumer confidence figure today |
| Gold | 4313 | -0.68% | N/A |
| Brent Crude | 101.36 | +1.02% | Saudi increases oil production |
KEY MARKET THEMES
01 — US PMI figures due out today
The US preliminary services, manufacturing and composite PMI figures for September are set to be released during today’s American trading session. The current expectations by economists are for the services and manufacturing PMI figures to come in lower than the prior month’s figure. In turn should the PMI figures come in as expected it could weigh on the dollar.
Market implication (USD): BEARISH
02 — Trump threatens Iran
According to Reuters, “US President Donald Trump warned on Tuesday that he could annihilate Iran if there is no deal to end the war, but also suggested an agreement could come soon amid a diplomatic push at the United Nations”, with President Trump also stating during his speech that he has “a big decision to make”. In turn the possibility of a strike may provide support for oil prices, as it may imply a resumption of hostilities between the two nations. Yet, the implication of a possible deal between the two could alleviate some concerns over the hawkish commentary emerging.
Market implication (#OIL): NEUTRAL
03 — ECB Chief Economist Lane to speak
ECB Chief Economist Lane is set to speak later on today. Depending on the narrative which emerges from the policymaker the EUR could be influenced. In particular, we are looking to see if the Chief economists adopts a more hawkish tone and raises concerns over the state of inflation in the Zone. In turn any suggestion of a more aggressive ECB could aid the EUR and vice versa.
Market implication (EUR) : N/A
WHAT MATTERS TODAY
US preliminary Manufacturing PMI figure for September
- Time (GMT+2): 16:45
- Expected: 53.90
- Previous: 53.60
Potential market reaction:
Could weaken the EUR
ECB Chief economist Lane speaks
- Time (GMT+2): 19:30
- Expected: N/A
- Previous: N/A
Potential market reaction:
N/A
WHAT MATTERS TOMORROW MORNING
Australia’s employment change figure (August)
- Time (GMT+2): 04:30
- Expected: 20.0k
- Previous: -15.8k
Potential market reaction:
Could support AUD
ASSET FOCUS
[OIL / COMMODITIES]
Oil prices appear to be moving in a downwards fashion having cleared our support turned to resistance at the 84.73 (S1) level. We opt for a bearish outlook for the commodity’s price, yet for our bearish outlook to continue we would require a clear break below our upwards moving trendline and our 84.75 (S1) support level, with the next possible target for the bears being our 78.35 (S2) support line. On the other hand, for a sideways bias we would require the commodity’s price to remain confined between our 84.75 (S1) support level and our 91.25 (R1) resistance line. Lastly, for a bullish outlook we would require a clear break above our 91.25 (R1) resistance line with the next possible target for the bulls being our 99.30 (R2) resistance level.
KEY LEVELS
- Resistance (R1): 91.25
- Resistance (R2): 99.30
- Support (S1): 84.75
- Support (S2): 78.35
Technical View: BEARISH
CROSS-ASSET VIEW
| ASSET CLASS | BIAS | KEY DRIVER |
| Equities | Bullish | Major companies received upgrade valuations |
| USD | Bullish | Inflation |
| Gold | Bearish | Dollar |
| Oil | Bearish | Trump’s willingness to make a deal |
RISKS TO THE VIEW
The US striking Iran during the UN General Assembly or vice versa
The biggest risk to our view is still the US and Iran rapidly escalating hostilities with one another during the UN General Assembly. Doing so could upend our view’s immediately.
TRADING SPHERE VIEW
Bearish for oil
Our base case:
Despite rhetoric emerging on Sunday with Iran and the US pointing their ‘knives’ at each other’s throats, President’s Trump’s willingness to meet with the Iranian President during the UN General Assembly may take precedent and thus should the two leaders meet and discuss any framework for the Mid-East, it could weigh on oil prices.
What would change our view:
The US re-escalating strikes on Iran and vice versa
TODAY’S WATCHLIST
01 US PMI figures
02 ECB Chief Economist Lane
03 Fed Governor Barr
04 ECB Cipollone’s speech
