Yields stalled after reaching a cycle high following ADP’s cooler-than-expected hiring data Wednesday, offering a sigh of relief leading to the official NFP release, with gains mainly driven by travel and automotive stocks. Oil crashed over 5% on EIA’s gas build, helping ease inflation concerns.
Chart: WTI
Oil prices experienced a steep drop not seen in over a year despite the EIA showing a 2.2M barrel build in crude stocks and confirmation from OPEC to maintain production levels as gasoline inventories added 6.5M barrels. WTI plunged 5.6% to settle at 85.81, erasing gains made since Saudi Arabia and Russia’s pledge, with next support at $82 and resistance at $86 a barrel. Meanwhile, a US-SA mega deal is brewing in the background, weighing on sentiment.
Private payroll growth in September was significantly lower than the 153K expected, with job growth totalling just 89k, indicating a potential cooling in the labour market. It comes after a sharp rise in job openings on Tuesday, easing recent concerns until the NonFarm Payrolls shed more light. The dollar stalled, assisting EUR/USD bulls to bounce off further from the low of $1.045 and reclaim $1.05 despite worse-than-expect Retail Sales and mixed PMIs in the EU. The move was partially supported by ECB Lagarde’s hawkish stance and cooler ISM Services in the US. $1.0556 is expected resistance higher up.
The BOJ’s money market data suggested that Japan probably did not intervene in markets earlier inthe week, with Thursday’s projections aligning with expectations excluding intervention, at a 10 billion yen surplus. Despite the dollar ending broadly lower on Wednesday, USD/JPY closed the session mixed as traders entered a battleground without expected pressure from -at least- the BOJ, but volatility remains elevated. Eyes are on ¥147.87 and ¥149.58 next.
The final print of the S&P Global Services PMI fell to 49.3 in September, below the 50 expansionary threshold but higher than the preliminary reading of 47.2. Along with the pause in the dollar’s rally, GBP/USD rose for the first time since last Thursday to lay eyes on $1.22 next. Above there, resistance is settled by $1.2237, with support exposed at the March low of $1.2036.