USD

The US dollar gave up its gains to its major counterparts, as the US government shutdown extended for another day. 

It didn’t help that US data was weaker than expected, with the ADP private payrolls figure showing a 166K increase instead of the estimated 177K rise. The previous month’s figure was revised down from 176K to 159K, reflecting a larger downturn in hiring for the past few months. For today, the initial jobless claims and ISM non-manufacturing PMI are up for release. Another round of weak data and a third day of the government shutdown could keep weighing on the Greenback. 

EUR

The euro was able to recover in yesterday’s trading as Italian Prime Minister Letta announced victory. He was able to secure enough votes to keep the coalition government in place and prevent a loss of confidence in his leadership. Data from the euro zone was actually weak, with the Spanish unemployment change printing twice as much as the estimated 12K rise in joblessness. The ECB kept interest rates unchanged at 0.50% but Draghi reminded market watchers that further weakness could be in the cards. Spanish and Italian services PMI are up for release today, along with the region’s retail sales figure. 

GBP

The pound was able to bounce back to action in yesterday’s trading, thanks to overall dollar weakness. Data from the UK, however, was a disappointment, as the construction PMI didn’t meet the consensus. The figure fell from 59.1 to 58.9, lower than the estimate at 60.1. For today, the services PMI is up for release and we might be in for another weak figreu. 

CHF

The franc rebounded against the dollar yesterday but weakened against the euro. USD/CHF fell back below the .9000 handle briefly while EUR/CHF held on to 1.2250. There were no reports released from Switzerland yesterday and none are due today, which suggests that franc pairs could be sensitive to US and euro zone reports. 

JPY

The yen staged a strong rally against its major counterparts, pushing USD/JPY to its one-month low. The yen rallied on the heels of the Nikkei selloff. There were no reports released from Japan yesterday and there are no reports due today, which suggests that yen pairs could continue to react to the Japanese stock indices. 

Commodity Currencies (AUD, CAD, NZD) 

The Australian dollar and the New Zealand dollar were able to get back on their feet yesterday, as both took advantage of the dollar selloff. The Canadian dollar’s gains were limited, as the Canadian economy also stands to suffer if the U.S. economy shows further weakness. Data from Australia was weaker than expected while New Zealand didn’t release any economic reports recently. There are no reports due from Canada, Australia, and New Zealand today. 

By Kate Curtis from Trader’s Way