GBP

Sterling gained ground against the dollar on Wednesday after the US ADP employment report badly disappointed. The report showed a gain of only 374,000 private sector jobs in the US last month, when over 600,000 were expected. Economists have now reduced their forecasts for the all important monthly non-farm report which is released tomorrow. Against euro, sterling closed down 0.2% on the day, as the single currency found support against the greenback following the jobs data release. Pessimism surrounding EU-UK ties over the Northern Ireland protocol remain after Northern Ireland’s economy Minister Gordon Lyons said there will be more problems if the grace period expired as planned on October 1st.

EUR

The Euro continued its recent climb hitting a four week high against the Dollar on Wednesday. The shared currency has found support as Eurozone inflation data released earlier this week prompted comments from ECB policymakers. Governing council member Robert Holzmann said that the ECB should start debating how it will phase out its pandemic stimulus and focus on tools that would achieve its 2% inflation target. Bundesbank president Jens Weidmann added to this “hawkish” rhetoric saying Eurozone inflation is at risk of overshooting the ECB projections as the temporary factors behind its recent spike could seep into underlying price growth. These comments prompted a rise in 10 year German bond yields to their highest level since mid-July, in turn creating a demand for the euro.

USD

The dollar remains around multi-week lows against the euro and Yen in early trading. Although manufacturing data beat expectations on Wednesday, this was overshadowed by the ADP jobs report. U.S. trade figures and jobless claim figures are released later this afternoon and the latter may give clues to tomorrows non-farm payrolls. Traders are especially scrutinising jobs data after Federal Reserve Bank head Jerome Powell said last week that the jobs recovery would determine the timing of the asset purchase tapering.

Economic Calendar

10.00 am EUR Producer price index
1.30 pm US initial jobless claims
1.30 pm US goods and services trade balance