Euro extends gains

The euro has extended its gains against the dollar after the release of more soft US economic data with the single currency now knocking on the door of  $1.10, off its low of the week of just under $1.09 set on Monday. The pound has also advanced further against the dollar to trade at around $1.2350 this morning, which in turns leaves it largely unchanged against the euro at just under 89p

Bond yields in the core markets continued their descent following the US data, with 10-year yields in the US a further 6bps lower at 1.53% (bringing the cumulative decline to 20bps over the past couple of weeks) and German 10-year yields 5bps lower at -0.60%.

The ISM index of n0n-manufacturing (i.e. mainly services) activity in the US fell to its lowest level in about three years in August, with the latest reading of 52.6 consistent with continuing positive but slowing growth in this sector. The equivalent index for manufacturing, meanwhile. shows activity in this sector is contracting

The composite PMI for the UK  fell below the expansion-contraction threshold of 50 in September (to stand at 49.3). As such, the index, which combines manufacturing and services into a single measure of activity, points to the possibility that GDP fell for a second consecutive quarter in the third quarter of the year

The main data release today is the employment (‘payrolls’) report in the US, with the consensus expecting job gains of 145k in September and the unemployment rate to remain at 3.7% for a fourth consecutive month