Missiles have been launched from Iran toward Israel. Missiles entering airspace in TelAvivIran says its response to Israel has been carried outIDF spokesperson: We will respond to Iranian missiles at the appropriate time and placeUS September ISM manufacturing index 47.2 vs 47.5 expectedUS August construction spending -0.1% vs +0.1% expectedUS Sept S&P Global final manufacturing PMI 47.3 vs 47.0 prelimJOLTS job openings 8.040M vs 7.660M estimateCanada September S&P Global manufacturing PMI 50.4 vs 49.5 priorECBs Kazaks: Very much agree with market pricing on ECB’s o October interest-rate decisionIsraeli assassinates commander in charge of the weapons transfer from Iran to HezbollahIran informed ‘international parties’ of the size and timing of its strikeAtlanta Fed Q3 GDPNow cut to 2.5% from 3.1%SNB’s Schlegel: Reason for last week’s rate cut was lower inflationary pressureNew Zealand GDT price index +1.2%Fed’s Cook predicts AI-fueled productivity gainsDallas Fed September service sector outlook index -2.6 vs -7.7 priorNew Japan PM Ishiba: Japan on the cusp of making complete exit from deflationFrance’s Barnier: I plan to reduce deficit to 5% of GDP in 2025
Markets:
Gold up $24 to $2685WTI crude oil up $2.15 to $70.32US 10-year yields down 6.3 bps to 3.73%CAD leads, NZD lagsS&P 500 down 53 points to 5708, or 0.9%
Economic data wasn’t the driver of market moves on Tuesday but rather a missile strike by Iran in Israel. Reports so far don’t suggest casualties or damage but it’s early. Israel is also talking about a response so the market is waiting for that but fearing damage to Iran’s oil infrastructure.
The attack was either leaked by Iran or picked up by US/Israeli intelligence beforehand so the market moves came on the first warnings with strong bids in the yen and dollar. Gold and oil also benefited while US stocks went from modest losses to a 2% decline in the Nasdaq.
Layered into that was a strong JOLTS report that suggests the Fed won’t need to cut 50 bps in November. Still, we have some major data coming in the remainder of the week that will overshadow that data point, including Friday’s non-farm payrolls.
After the dust settled on the attacks, there was some dip buying that helped to lift commodity currencies and the pound but they remained below pre-attack levels, with the exception of CAD.
It was also the first day of the quarter so flows were a factor, particularly in fixed income.
This article was written by Adam Button at www.forexlive.com.
