ith Chair of the Federal Reserve Janet Yellen not commenting on monetary policy during her speech yesterday evening all focus was on the very impressive non-manufacturing PMI from ISM. The index, which is a broad measure of activity in the country’s services sector, spiked to a sky-high 59.8, its highest level since August 2005. This came a matter of a few days after the ISM’s manufacturing index, which also grew at its fastest pace in 13 years, pointing to a strong bounce in overall economic activity in the third quarter. It appears that growth in the world’s largest economy has so far proved largely unaffected by both Hurricane Harvey and Irma and their drag on growth should be fairly minimal.

Yesterday’s ADP employment change number, which measures job creation in the private sector of the US economy, also boded well for Friday’s more important nonfarm payrolls number. The private sector created an above forecast 135,000 jobs in September versus the 125,000 consensus. While this is a slight slowdown on the previous few months, the weak number on this occasion can largely be attributed to the recent extreme weather and is likely to prove temporary.

The US Dollar will hinge on a raft of appearances from Federal Reserve members this afternoon. Members Powell, Williams, Harker and George will all be speaking as investors try to attain additional clues as to the likelihood of an additional interest rate hike in the US before year end.

Sterling sinks as investors overlook services PMI

An eventful day in the Conservative Party conference, which saw Theresa May’s highly anticipated speech interrupted by a heckler and a bout of coughing, actually provided very little new information with not much focus on the topic of Brexit.

Sterling slipped back below the 1.32 mark this morning, despite yesterday’s impressive services PMI which provided no more than a temporary boost for the currency. The services index came in at a better-than-expected 53.6 in September, alleviating concerns regarding a broad economic slowdown in the UK economy in the third quarter of the year. Barring a bout of soft news on both the inflation and growth front in the next few weeks, we think the Bank of England will deem conditions appropriate to raise interest rates in the UK for the first time in decade at its next meeting in November.

With no economic data releases in the UK today, investors will look to a speech from BoE chief economist Andy Haldane after market close.

ECB to release September meeting accounts

President of the European Central Bank Mario Draghi also provided few headlines during his public appearance yesterday and certainly nothing worthy to move the currency markets. The Euro instead edged modestly lower, although this was almost entirely due to strong data in the States. Investors mostly overlooked yesterday’s retail sales data, which was actually a slight disappointment. Today is likely to prove a day dominated by the ECB with speeches from rate-setters Praet and Cœuré either side of the release of the bank’s meeting accounts from its September meeting just after midday.