While the Western indices remained fairly robust, the forex markets became more subdued as Wednesday wore on.
It was a pretty strong afternoon for US data. The ADP non-farm employment change reading hit 235K, sharply higher than last month’s 110K, to set up a potentially massive ‘official’ number on Friday, while the final Markit manufacturing PMI for October came in a tad higher than forecast at 54.6. Only the ISM manufacturing figure disappointed, and even then, at 58.7, it was a more than respectable number.
The dollar was the main beneficiary of all this (the Dow Jones lost roughly a third of its early gains, though after rising 100 points it’s still at a fresh all time high). The greenback reversed its initial losses against the pound to climb 0.1%-0.2%, sending cable back below $1.33, while against the euro it jumped 0.2%. This reaction was presumably related to the hawkish-tinge of the day’s data, with investors hoping the Federal Reserve tees up a December rate hike with this evening’s statement.
Despite the pound losing its lustre against both the dollar and the euro – thanks to a combination of the former’s pre-Fed strength and more generalised jitters ahead of tomorrow’s BoE rate vote – the FTSE couldn’t muster any momentum this Wednesday afternoon. The retail sector continued to give the index a headache, with Next’s 8% plunge also leading Marks & Spencer and Associated British Foods (LON:ABF) 4% and 2% lower respectively.
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