Oil Plummets, Dollar Stalls, and Services PMIs Improve

Oil prices took a nosedive, ADP data sent yields tumbling, and the UK Services PMIs saw an unexpected upward revision.

Key Factors for Today

• Oil prices plummet over 5% due to a substantial gas build, while a US-SA mega deal looms.
• ADP's disappointing payroll data impacts yields and provides EURUSD with some breathing room.
• BOJ data suggests no intervention at ¥150, though volatility remains.
• Pound gains momentum after an upward revision in UK Services PMIs.

Market Movers

• Aussie and Kiwi currencies gained ground, up 0.67% and 0.56%.
• Euro strengthened by 0.17%, while Sterling climbed by 0.19%.
• Yen and Swiss Franc advanced by 0.40% and 0.31%, respectively.
• Canadian dollar also edged up against the USD, rising by 0.17%.
• Precious metals rallied with Gold up 0.37%, and Silver leading at +1.27%.
• Crude oil inched up by 0.4%, while Brent gained +0.48%.
• Natural gas futures soared, rising by 1.65%.

Economic Calendar

• German Exports
• French Industrial Production
• UK S&P Global/CIPS Construction PMI
• ECB Lane Speech
• US Trade Balance
• Initial Jobless Claims
• Fed Mester Speech
• ECB De Guindos Speech
• Fed Bakin Speech
• Fed Daly Speech
• Fed Barr Speech

The Big News

 Oil Sinks Over 5%

Crude oil prices experienced a sharp decline, plummeting by 5.6% to settle at $85.81 per barrel, marking a year-low. This drastic drop came in the wake of a 2.2 million barrel build in crude stocks reported by the EIA. Furthermore, OPEC's decision to maintain production levels failed to mitigate concerns as gasoline inventories added a whopping 6.5 million barrels. All eyes now turn to support levels at $82 and resistance at $86.

Large ADP Drop Impacts Yields

The US job market took a hit as the ADP report revealed a dismal private payroll growth of only 89,000 jobs in September, falling significantly short of the expected 153,000. This unexpected downturn raises questions about the labour market's strength, especially after a surge in job openings earlier in the week. Consequently, US Treasury yields hit pause, allowing EUR/USD to rally, moving away from its recent low of $1.045 and recapturing $1.05, with potential resistance at $1.0556.

BOJ Remains Quiet

The Bank of Japan's money market data indicates that Japan is unlikely to have intervened in currency markets this week. Thursday's projections aligned with expectations, reflecting a 10 billion yen surplus, and the lack of BOJ intervention saw USD/JPY closing the session with mixed results. However, volatility continues to grip the market, with traders watching closely at ¥147.87 and ¥149.58.

UK Services PMIs Revised Upward

While the final print of the S&P Global Services PMI in the UK remained in contraction territory at 49.3 for September, it exceeded the preliminary reading of 47.2. This positive revision offered a glimmer of hope, causing GBP/USD to rise for the first time since last Thursday, setting its sights on $1.22. Above this level, resistance sits at $1.2237, with support at the March low of $1.2036.