European FX Open - PMIs and US initial claims the data highlights ahead

The YEN has plunged to six-week lows after dovish comments from Japan’s PM Ishiba on Wednesday continues to spur BOJ repricing into year-end.

Recall yesterday, the PM said that the economy isn’t ready yet for further interest-rate hikes, while Bank of Japan Ueda said that the outlook for the global economy is uncertain and financial markets remain unstable.

USD/YEN gains picked up late yesterday after the ADP Private Payroll report for September came in higher than expected, while this week's better than forecast JOLTS data and those less-dovish Powell remarks have all aided the greenback higher.

Safe haven buying for the greenback was also cited following an escalation of the war in the Middle East, though USD/YEN is marginally off the 147.24 overnight high after the PM's spokesperson Hayashi said that the specifics of monetary policy should be left the Japanese central bank. A policy board member meanwhile stressed the need to keep financial conditions easy until inflationary expectations take root.

EUR/USD remains heavy as markets moved to price almost 100% odds of an October ECB cut after data Tuesday showed EZ inflation cooled to below the 2% target for the first time since 2021 while the ECB's REHN admitted that there are now more grounds for cutting rates at the October meeting. French politics also remain a weight.

Overnight, the Fed’s Barkin said he sees a total of 50 bps in rate cuts across the remaining two Fed meetings of the year as "a reasonable path".

Australia’s trade data for August showed the trade surplus coming in slightly above forecasts. The IMF meanwhile said that the "current restrictive monetary policy stance is essential" to counter upside risk to inflation in Australia.

NZ’s ANZ Commodity Price Index for September rose by a second straight month. Also in NZ, Kiwibank said it now sees the RBNZ trimming the OCR by 50 bps at both the October and November meetings.

US equities closed near flat as participants await cues on the policy path from the US NFPs this Friday,

This morning in Europe, focus will now turn to services/composite PMIs from Germany, France, Italy, Spain, the Eurozone, the UK and Sweden.

Eurozone Aug PPI is also due.

No ECB speakers are scheduled.

In Switzerland, inflation figures are the highlight. Headline CPI is widely expected to ease a tad to 1.0% y/y in September, on the back of a modest 0.1% decline from August. The core CPI, however, should remain unchanged.

In the US, the ISM Services Index is widely expected to show the services sector maintaining a similar pace of expansion, even as the price sub-gauge eases. The usual round of weekly initial jobless claims figures will be out, as well as Sep Challenger Job Cuts, composite/services PMIs, Aug Factory Orders and final Durable Goods Orders.

Fed speak comes courtesy of Kashkari and Schmid.

Canada focus will be the Sep S&P Global Composite and Services PMIs.

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