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The final Euro-zone PMI manufacturing index was unchanged from the flash reading at 53.7 from 51.7 the previous month with the Spanish index returning to expansion for the month.  The Euro-zone unemployment rate increased to 8.1% for August from 8.0% previously and in line with market expectations.

The Euro gained ground briefly following speculation that the UK and EU were poised to strike a trade deal, but gains faded quickly as these report were denied. From highs at 1.1770, the Euro retreated to below 1.1750 with Euro-zone coronavirus developments also unsettling confidence in the single currency.

Initial US jobless claims declined to 837,000 in the latest week from a revised 873,000 the previous week and just below consensus forecasts of 850,000. Continuing claims declined to 11.77mn from 12.75mn the previous week, although overall claims, including pandemic assistance, rose in the week to September 12th.

The ISM manufacturing index retreated to 55.4 for September from 56.0 the previous month and slightly below consensus forecasts of 56.2. There was a monthly slowdown in production and new orders growth, although the rate of expansion was still robust. There was only a slight decline in employment for the month while prices increased at a faster pace. The overall data was impacted was limited with both the Euro and dollar struggling for traction and the Euro settled around 1.1740.

Risk appetite was more fragile on Friday which triggered renewed dollar backing and the Euro dipped below the 1.1700 level before recovering ground to 1.1725. The latest US employment report will be released on Friday, although the overall impact is liable to be limited unless there is a huge miss and decline in payrolls.


The dollar was again held in relatively narrow ranges during Thursday’s European session with support below 105.50, but little in the way of headway.

Markets continued to monitor the prospects for a US fiscal stimulus agreement and there were several meetings between House Speaker Pelosi and Treasury Secretary Mnuchin, but no agreement on a package. The House passed a $2.2trn fiscal package, but there was support from the Senate and overall talks remained stalled.

In Asian trading on Friday, White House advisor Hicks was confirmed as testing positive for coronavirus and that President Trump had entered quarantine.

Overall risk appetite was more fragile following the reports, especially given a lack of progress on a fiscal stimulus.

At the European open, it was announced that Trump had tested positive for COVID which triggered a further sell-off in equity futures. The yen gained renewed defensive support as the dollar traded below the 105.50 level. The US currency then tended to lose wider support and dipped to test the 105.00 area with the Euro near 123.0. 


The final UK PMI manufacturing index was revised down to 54.1 from the flash reading of 54.3 and the August reading of 55.2.  Economic data had little impact as political and political and trade considerations dominated. The UK currency declined sharply following reports that the EU would launch legal proceedings against the UK over the Internal Market Bill. EU Commission President Von der Leyen confirmed that the EU had sent a formal notice over a breaking of good faith over the Withdrawal Agreement. The UK government has one month to respond. After declined sharply, Sterling stabilised given that trade talks will be crucial.

Sterling then spiked higher ahead of the New York open following reports that the UK and EU had found a landing zone for on the issue of state aid. There was only one reported source for the breakthrough and EU officials subsequently denied that there was a potential landing zones for the level playing field or fisheries and dismissed the reports as UK spin. The UK currency traded in a wide range of over 150 points against the dollar as volatility intensified.

Sterling settled below 1.2900 against the dollar with the Euro holding above 0.9100. The UK currency dipped lower on Friday as risk appetite deteriorated and political developments will also remain important with the EU and UK Chief Negotiators due to meet. Sterling did find support below the 1.2850 level against the dollar. 


Swiss consumer prices were unchanged for September, in line with consensus forecasts, with the year-on-year rate edging higher to -0.8% from -0.9%, although market expectations were for a figure of -0.7%. The National Bank will remain wary over the deflation threat and wary over franc appreciation. The September PMI manufacturing index strengthened to 53.1 from 51.8 previously, although slightly below consensus forecasts of 54.4 which suggested a tepid recovery.

The Euro was unable to gain ground and consolidated around 1.0790 while the dollar found support near 0.9160. The franc edged higher on Friday amid weaker risk appetite and the dollar edged above the 0.9200 level before fading again as markets continued to monitor European and global political developments.



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