• ISM non-mfg PMI rises faster than expected in September; employment index declines
• Biden alleges that Israel is preparing to carry out attacks on Iran’s oil sites

The ISM non-manufacturing PMI survey indicated growth for the third straight month in September, with the index reaching 54.9 - the highest reading since February 2023 - surpassing analysts’ expectations of 51.7 and August’s reading of 51.4.

The new orders index saw a significant increase of over 6 points to reach 59.4, while the employment index dropped to 48.8, indicating contraction for the first time in three months, just before the crucial nonfarm payrolls report on Friday.

Despite the easing in labor demand, the odds for a second 50bps rate cut in November barely changed, remaining steady around 33% versus 67% for a single 25bps rate cut. EURUSD edged down to a three-week low of 1.1016 in the aftermath, with extra assistance from negative geopolitical developments in the Middle East.

President Biden revealed US government’s discussions on Israel’s potential strike on Iran’s oil facilities, following its opposition to retaliatory attacks on nuclear facilities. However, Washington seems hesitant to offer support for this course of action.

WTI oil futures flew as high as $73.93/barrel and the safe haven gold trimmed some of its daily gains to trade near $2,650/once.