European FX Open - Oil gains most acute after Iran attacks

The USD starts the day largely a little firmer across the board.

Elsewhere, US stock futures all stand small in the red at the time of writing, led by the -0.2% NASDAQ, and oil has spiked towards Usd 75/brl in the wake of last night's escalation in the war in the Middle East.

BBC News reports Israeli PM Netanyahu described the attack as 'a big mistake' and promised Iran 'will pay for it' after Tehran launched a missile attack on Israel. The Israeli military says around 180 missiles were fired, most of which were intercepted.

The escalation follows Israel's decision to invade Lebanon in a 'limited, localised and targeted' ground operation against Hezbollah. The UN and EU have reiterated calls for a ceasefire, with the UN Security Council due to meet today and latterly the British broadcaster report another night of Israeli airstrikes in Beirut.

So, a likely risk off start as markets mull and wait for the response from Israel, as a number of media outlets speculate on a possible attack on Iran's nuclear facilities. Will the recent brighter mood driven by the aggressive -50BPS Fed rate cut and large China stimulus begin to fade over coming sessions?

For today, the data slate is light and much of the market attention will likely be on the pre-NFPs release of more US jobs data. After yesterday's mini-spike in JOLTS job openings (8040k), it is the turn of the ADP employment change for September, forecast at 125k vs 99k the month previous.

There is also multi central bank speak from the ECB and Fed. Latterly, the ECB's Kazaks said the Bank is likely to lower borrowing costs in October and beyond, but the market’s easing expectations appear exaggerated.

And, the SNB’s new President Schlegel said the Bank can intervene in FX markets if required and stands ready to cut rates again.

Also overnight, in the debate of the US VP candidates, Tim Walz and JD Vance sparred over abortion and the economy. Walz was viewed as stumbling over responses to tensions in the Middle East and previous misstatements, while Vance repeatedly targeted Democratic presidential nominee Harris. A CBS poll after stated Vance won by a tiny margin.

Bbg also reports that UK PM Starmer heads to Brussels to try to reboot post-Brexit ties. Starmer is said to be seeking deals on defense and food checks, while Brussels wants youth mobility and citizens’ rights agreements.

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