Here is what you need to know on Friday, October 1:
Markets are kicking the last quarter of 2021 on the back foot as soaring energy costs, fears of Fed tapering and US political infighting weigh on sentiment. The greenback is gaining ground against all assets despite falling yields. US Core PCE and the ISM Manufacturing PMI are closely watched.
Risk-off: September was the worst month for US stock markets since March 2020, and October has also begun with red on the screens. The Federal Reserve's upcoming tapering announcement has moved away from the driver's seat in determining sentiment. Nevertheless, the dollar remains bid on safe-haven flows.
Energy crisis: Chinese authorities are seeking to accumulate natural gas "at all costs" and according to reports, say that power outages are not to be tolerated. The news adds to already surging costs in Asia and also in Europe before cold weather has arrived in earnest. Higher costs could derail the recovery even if blackouts are avoided.
Congress: Democrats delayed a vote on a bipartisan infrastructure bill in response to objections from the progressive wing, who want guarantees about the larger expenditure bill. House Speaker Nancy Pelosi hopes to push through economic legislation on Friday.
US lawmakers quickly passed a law funding the government through December 3, averting a government shutdown. However, they have yet to raise the debt ceiling, leaving the remote possibility of default in mid-October.
EUR/USD is trading well below 1.16, at the lowest since November 2020. Eurozone inflation figures are set to show an increase in the annual Consumer Price Index from 3% to 3.3%. German and Spanish figures exceeded estimates. Final Manufacturing Purchasing Managers' Indexes are also eyed.
GBP/USD is trading around 1.3450, off the 2021 lows but under pressure. Britain is still grappling with shortages at petrol stations. Final Manufacturing PMI is also of interest.
Gold is trading around $1,750, clinging to gains made on Thursday. The precious metal remains dependent on yields.
Core Personal Consumption Expenditure, the Federal Reserve's preferred gauge of inflation, is set to show moderation in August after hitting 3.6% YoY in both June and July. Fed Chair Jerome Powell said he expects inflationary pressures to ease in the first half of 2022.
See US Core PCE Preview: Only a sharp fall in the Fed's favorite gauge could dethrone King Dollar
USD/CAD is trading around 1.27, rising as oil prices lag behind natural gas costs and ahead of Canada's publication of monthly growth figures for July. A small contraction is on the cards after the nation reported a growth rate of 0.7% in June.
Cryptocurrencies are mixed on Friday, with Bitcoin trading around $44,000, Ethereum just above $3,000, and Ada at around $2.10.
The ISM Manufacturing PMI is published later in the day and serves as the first hint toward next week's all-important Nonfarm Payrolls. The indicator is set to show robust growth but persistent inflationary pressures.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats to 1.0700 area following post-PCE jump
After spiking to a daily high of 1.0720 with the immediate reaction to US PCE inflation data, EUR/USD lost its traction and declined to the 1.0700 area. Investors remain cautious ahead of this weekend's French election and make it difficult for the Euro to gather strength.
GBP/USD stays below 1.2650 after US inflation data
GBP/USD struggles to preserve its bullish momentum and trades below 1.2650 in the American session on Friday. Earlier in the day, the data from the US showed that the annual core PCE inflation declined to 2.6% in May, limiting the USD's upside and helping the pair hold its ground.
Gold keeps its daily gains near $2,330 following US PCE data
Gold prices maintain their constructive bias around $2,330 after US inflation readings gauged by the PCE matched consensus in May and US yields advance slightly across the curve.
BTC struggles around the $62,000 level
Bitcoin price faces pullback resistance at the lower band of the descending wedge around $62,000. Ethereum price finds support at $3,288, the 61.8% Fibonacci retracement level. Ripple price faces resistance at $0.500, its daily resistance level.
French Elections Preview: Euro to suffer after the calm, as specter of extremists, uncertainty rise Premium
The first round of French parliamentary elections is set to trigger high uncertainty. Soothing messages from the far right and far left leave the Euro vulnerable to falls. Calm may return only after the second round of voting on July 7.