Energy crisis, higher yields lift dollar, ADP jobs, debt ceiling headlines eyed

The market mood has soured on Wednesday after a positive Tuesday. Surging energy costs and a break higher in US yields are hitting stocks bidding the dollar, even against the kiwi, where a rate hike failed to help. ADP’s jobs data is eyed after the upbeat ISM Services PMI. Debt ceiling and stimulus headlines are eyed. Cryptos are up, gold is stable.

Energy crisis: WTI Crude Oil tops $79, the highest since 2014 in another response to the OPEC+ decision to limit production increases and no surplus elsewhere. Natural gas prices extend their meteoric rise in Europe and threaten to cripple the recovery. Several European governments want to coordinate policy.

US 10-year Treasury yields have hit 1.57%, the highest since June, and that benefits the US dollar., alongside safe-haven flows

EUR/USD has slipped back below 1.16 ahead of eurozone retail sales. GBP//USD is struggling around 1.36 ahead of UK Prime Minister Boris Johnson’s speech on his vision for the country. The British army continues helping bring petrol to stations.

NZD/USD is trading around 0.6920, down amid greenback strength and despite a rate hike from the Reserve Bank of New Zealand. The RBNZ’s increase of borrowing costs from 0.25% to 0.50% was fully priced in, and the kiwi suffered from the bank’s signal of cautious moves down the road.

US data: The ISM Services Purchasing Managers’ Index for September surprised to the upside with 61.9 points and robust subcomponents. The news underpinned equities on Tuesday before the mood soured. The focus on Wednesday is ADP’s private-sector jobs report for September, which serves as a significant hint toward Friday’s Nonfarm Payrolls. Contrary to previous months, ADP’s statistics foresaw the broad trend last time.

See US ADP Employment Change September Preview: Yes, its all about the Fed

US politics: The clock continues ticking toward the US hitting its debt ceiling in mid-October, and President Joe Biden floated the idea of ditching the Senate filibuster to break the deadlock, as Republicans remain reluctant to prevent a default on debt. Democrats continue clashing on the broad spending bill, with some reports it could come down from $3.5 to roughly $2 trillion.

Cryptocurrencies advanced on Wednesday, with Bitcoin jumping above $50,000 and changing hands at above $51,000 at the time of writing. Ethereum is hovering around $3,500 and Shiba Inu continues standing out after a tweet from Tesla’s Elon Musk earlier in the week.

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