Pound Drops on Hard Brexit Fears, US Dollar May Rise on Fed Bets

Talking Points:

The traded lower as worries about a “hard Brexit” continued to swell ahead of a much-anticipated speech from at the conclusion of the Conservative Party Conference in Birmingham. The UK unit has faced heavy selling pressure since the Premier and suggested that immigration controls will take precedence over securing access the single market over the weekend.

The final round of figures will probably pass with little fanfare as investors opt against committing to a directional bias before Ms May’s remarks. A policy speech from may generate a bit more attention if he suggests that the central bank is gearing up to boost stimulus further in anticipation of a rocky EU negotiation. Still, lasting follow-through seems unlikely until after the Prime Minister has laid out her vision.

Later in the day, US economic data will be in focus as gauge and the report cross the wires. A pickup in service-sector activity growth (53.0 vs. 51.4 prior) and a mild slowdown in job creation (165k vs. 177k prior) are expected in September. Recent stabilization in US news-flow relative to consensus forecasts may foreshadow outcomes broadly in line with recent trends, which officials have signaled are supportive for a rate hike before the end of the year. Confirming as much may boost the .

The underperformed in overnight trade after dairy auction produced the lowest prices in two months. The drop was seemingly interpreted as encouraging a more dovish RBNZ posture as reduced revenues on sales of the island nation’s top export commodity hurt overall economic growth. Indeed, the currency paced a decline in front-end bond yields. The priced-in probability of a 25bps cut at next month’s policy meeting now stands at 68 percent.

This might be why

22:30

AiG Perf of Services Index (SEP)

48.9

45

23:01

BRC Shop Price Index (YoY) (SEP)

-1.8%

-2.0%

00:00

ANZ Commodity Price (SEP)

5.1%

3.2%

00:00

Chicago FRB Evans Addresses CFA Society Event

00:30

Japan PMI Services (SEP)

48.2

49.6

00:30

JPY

Nikkei Japan PMI Composite (SEP)

48.9

49.8

00:30

AUD

Retail Sales (MoM) (AUG)

0.4%

0.2%

0.0%

05:30

NZD

RBNZ’s McDermott Comments on Panel

07:00

ECB’s Nowotny Speaks in Vienna

Low

07:45

EUR

Markit/ADACI Italy Services PMI (SEP)

52.0

52.3

Low

07:45

EUR

Markit/ADACI Italy Composite PMI (SEP)

51.5

51.9

Low

07:50

EUR

Markit France Services PMI (SEP F)

54.1

54.1

Low

07:50

EUR

Markit France Composite PMI (SEP F)

53.3

53.3

Low

07:55

EUR

Markit Germany Services PMI (SEP F)

50.6

50.6

Medium

07:55

EUR

Markit/BME Germany Composite PMI (SEP F)

52.7

52.7

Medium

08:00

EUR

Markit Eurozone Services PMI (SEP F)

52.1

52.1

Medium

08:00

EUR

Markit Eurozone Composite PMI (SEP F)

52.6

52.6

Medium

08:30

GBP

Official Reserves Changes (SEP)

-$463m

Low

08:30

GBP

Markit/CIPS UK Services PMI (SEP)

52.2

52.9

Medium

08:30

GBP

Markit/CIPS UK Composite PMI (SEP)

52.3

53.6

Medium

08:30

GBP

BOE’s Broadbent Speaks in London

Medium

09:00

EUR

Retail Sales (MoM) (AUG)

-0.3%

1.1%

Low

09:00

EUR

Retail Sales (YoY) (AUG)

1.5%

2.9%

Low

10:30

GBP

UK PM May Speaks at Conservative Party Conf.

1.0992

1.1093

1.1148

1.1249

1.1295

1.1396

1.2488

1.2629

1.2678

1.2819

1.2911

1.3052

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