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Here is what you need to know on Thursday, October 3:

  • The market mood remains damp after the US ADP Non-Farm Payrolls disappointed with 135K, joining the weak ISM Manufacturing Purchasing Managers’ Index (PMI) – which increased concerns of a recession. The US dollar has been on the back foot as the odds for the Fed to raise rates have risen.  The safe-haven yen and gold benefited from the risk-off mood.  
  • Today’s ISM Non-Manufacturing PMI may trigger more volatility than normal and it is expected to show a positive picture in the services sector. Expectations for Friday’s Non-Farm Payrolls have dropped. See  US Service Sector September PMI Preview: How slow is slow?
  • Impeachment: President Donald Trump hit back at Democrat Adam Schiff and said he should be tried for treason. Democrats are moving relatively fast with the inquiry. Markets are worried about political uncertainty also stemming from Elisabeth Warren’s ascent in the polls.  
  • Brexit: UK prime minister Boris Johnson laid down his new plan – dubbed “two borders, four years.” The limited-time Irish backstop and potential customs checks have triggered disappointment from Ireland but the EU has not rejected them outright, allowing GBP/USD to hold its ground. Negotiations continue. UK Services PMI is due out today after the PMIs for the manufacturing and construction sectors fell short of expectations.  
  • Trade: While China is on holiday, the US is preparing new tariffs against the EU. The World Trade Organization ruled in favor of America in the case against illegal subsidies to Airbus, the European aviation giant. Brussels has called Washington to refrain from acting as a similar case against Boeing is awaiting a ruling next year.  
  • Commodity currencies: The Canadian dollar suffered as oil prices resumed their decline, with WTI falling to the $52 handle.  
  • Cryptocurrencies have remained stable with Bitcoin trading above $8,300.