Yesterday’s Round Up

Eurozone services data release, bad news for oil, Sunak speaks out at Conservative party conference, and today's news.

EU & UK

A slight reprieve for European and British importers yesterday, as generally better than expected EZ services data and a better than forecast final UK Services PMI print allowed both EURUSD and GBPUSD to reclaim the 1.0500 and 1.2100 handles respectively.

Aided by the US Non-Farm Employment Change missing forecast and US Services data coming in largely as expected. Given that the US services data maintained expansionary territory, in contrast to the EZ and UK, this may be profit taking on stretched EURUSD and GBPUSD positions. All eyes will be focused on the US Non-Farms Payrolls print tomorrow, where a beat could reinstate the recent dollar trend and a miss could allow for further paring.Oil

Oil

Oil took a relative battering yesterday as Brent fell nearly 6% from peak to trough, instigated by murmurs that Russia may lift their ban on diesel exports. High interest rates and worries of an economic slowdown leading to demand destruction, all adding to the decline and a welcome retracement heading into the winter after a near 30% increase in price observed over the last few months.

Rishi’s Reforms

Sunak spoke at his first Conservative Party conference and took aim at his predecessors, suggesting we’ve had 30 years of vested interests standing in the way of change, whilst promoting himself as the agent of change. Dominating the conference was his decision to cancel the northern leg of the HS2 rail project, which was backed by all five of his predecessors, and reallocate funds to national transport links.

Well covered on social media was his plan to raise the legal smoking age and restrict the availability of vapes to children.

Introduce the “Advanced British Standard”, a new single qualification for school-leavers that would help level academic and technical education.

Provide bonuses to new teachers that should help attract a larger workforce to the profession.

Deflecting the tax cut issue, he reiterated that halving inflation is the best tax cut the British public can currently receive. Going on to state his progress on reducing inflation, restoring growth, cutting debt, reducing NHS waiting lists and limiting the number of immigrants crossing the channel.

The latest an election can be called is January 2025, and expected in the autumn next year. 20 points behind Labour in the opinion polls, Sunak and the Conservatives may need every one of those months to recover the ground lost to Labour.

Elsewhere

Australia’s trade balance widened as surplus of A$9.64b against a forecast A$8.7b, fuelled by a 4% rise in exports saw AUD as yesterday’s best performing major currency. This is welcome news as exports have been negative over the last few months and suggests signs of economic life from Australia’s largest trading partner, China. One US economist calling the bottom of China woes and upgrading their FY 2023 GDP forecast to 5% from 4.7%.

Today’s Data Docket

The first week of the month and more US Labour data, September’s Unemployment claims released at 1.30pm. And UK Construction data this morning at 9.30AM, expected to print in expansionary territory.