The first day of October is one of the most active ones this week. Volatility was high in the morning and will last until the evening for most currencies.
The day began with news from Japan, where the Tankan sentiment index of major manufacturers for the third quarter was published, as well as the unemployment rate. Investors' expectations were exceeded by almost all indicators, and unemployment fell to 2.2% in August. Thus, the yen has received enough incentives to strengthen thanks to internal macroeconomic factors. Investors also preferred a safe-haven asset given today's RBA decision to cut the rate by 25 pips. In addition, there are concerns among investors about uncertainty with Brexit and a decrease in the probability of a deal before the end of this month.
Most macroeconomic reports on the EU economy as a whole confirmed the economic downturn, especially in the key EU economies. The uncertain situation with Britain also contributes to the weakening of the Euro. Inflation slowed to a 3-year low of 0.9%. The PMI manufacturing indices for both Germany and the eurozone, published today are well below 50 points, though they're slightly above forecasts.
In October, the US sales season begins, which should contribute to the revival of the US economy and seasonally strengthen the USD. The dollar can also count on support today with the publication of the PMI index of business activity in the manufacturing sector. In the evening, investors will return to the EU, where ECB head Mario Draghi is expected to make a speech.
