Europe Summary and Highlights 23 Sep
Dollar retains broad bid, moving with spreads on the post Fed action
EUR/USD sees follow through to next support after clearing 1.1450, cable extends toward fib
Despite this, notable positive surprise in EZ PMI, orders to 4 year highs - one to watch
UK PMI in contrasts slightly disappoints if staying in the low 50s
Europe
The dollar stretches its post Fed bid, extending the move on further breaks – EUR/USD following through on the push through 1.1450 to 1.1410/00 support. Cable also down to the 1.3270 Fib level.
Fed speaker comments have remained relatively hawkish on strengthening activity and broad inflation, with Oct Fed hike bets currently sitting above 50-50. Short end spread moves have been driving recent action.
Notable though, and overshadowed on the morning, has been the positive surprise from EZ PMI data with composite index up to 53.1 from 52.0, the highest since Apr23, and well above market (51.7), with new orders at 4-year highs.
Macro surprise trends and the relative impacts of current oil slippage (if maintained and extended) on policy and performance will remain key further ahead.
On the oil front, Brent front month sitting just below $100. Still background talk of discussion progress and Iran proposal being conveyed through the Qatari mediator, even despite the belligerent Trump speech that caused hesitation yesterday, though nothing substantive and imminent new. Market left having to sit and wait out news, though there is obviously a certain window around the UN meet for positive to emerge if they are going to.
UK PMI meanwhile less impressive and still tending to leave sterling somewhat on the backfoot, if in dollar-driven action, with its composite, in contrast, dropping to 51.7 from 52.5 vs market 52, while still well clear of 50.