Intraday Market Thoughts

UK Services PMI Robust; Premium Trades up, ADP & ISM Due

by Ashraf Laidi
Oct 5, 2011 12:53

German and Eurozone Services PMI revised lower; Eurozone Retail Sales disappoint; UK Services PMI robust but GDP revised lower. Market turns to ADP and ISM Non-manufacturing. Latest Premium trades are up, including the return of USDCAD.

USD consolidates from yesterday's losses throughout the Asian and London sessions with mild downside bias. Overall sentiment has improved as European equity indices are in the positive territory.

Economic data from the Eurozone continues to disappoint as evidenced by final services PMI that was revised lower to 48.8 from the initial estimate of 49.1. The decline has been substantial considering that in August PMI printed 51.5. German services PMI was also revised lower and in this case it was to 49.7 from 50.3.This print is the lowest since 7/2009.

LATEST PREMIUM TRADES are now ready, with the addition of USDCAD. Yesterdays longs in gold ES (S&P500 futures NOT cash), US crude oil and EURGBP remain in progress. DIRECT ACCESS TO todays edition is here: NON-subscribers click here:

Eurozone August Retail sales do not provide a reason for optimism either. Monthly figure declined -0.3% and annual retail sales fell -1.0% from previous -0.4%. A decline was expected to a certain degree as German retail sales plunged -2.9% m/m last Friday.

GBPUSD gained half a cent to 1.5480s after September services PMI printed robust 52.9 (50.5 exp.) from previous 51.1. However, better than expected PMI is negated by UK GDP that was revised lower to 0.1% in Q2 from the initial estimate of 0.2%. Annual GDP was revised to 0.6% from 0.7%.

Series of negative UK data was interrupted this week by solid manufacturing PMI and services PMI which increases the chance that in regards to QE, the MPC will choose the "wait and see" approach tomorrow.

The New York session starts at 8:15 am ET with September ADP report that is seen lower at 76K from 91K in August. ADP has been declining gradually over the past seven months.

Later at 10:00 am ET ISM Non-manufacturing is due and is expected at 53 in September from 53.3 in August.

Crude oil inventories are seen lower at 1M barrels from 1.9M barrels last week. WTI has bounced from the 77 level and low print could provide the impetus for additional buying which could also support the CAD.

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