The US dollar is showing strength today, supported by escalating tensions in the Middle East and market anticipation ahead of tomorrow's US employment report. Among G10 currencies, the British pound has been hit the hardest, down around 1%. This decline follows comments from Bank of England Governor Andrew Bailey, suggesting that after last month’s pause, the central bank could adopt a more aggressive stance in the fourth quarter. Global equities and bonds are under pressure, while gold remains steady within Tuesday's price range. November WTI crude oil is trading firmly near $71.50 in Europe, just below yesterday's high of $72.50.

Asia Pacific Markets
Final September service and composite PMIs from Japan and Australia garnered little market attention. Meanwhile, Australia reported an August trade surplus of A$5.6 billion, significantly lower than the surplus in August 2023.
Rising US Treasury yields, combined with Bank of Japan Governor Ueda's indication that there’s no rush to hike rates, helped the dollar recover from JPY144 levels seen in early North American trading yesterday. The dollar approached last Friday's high of JPY146.50 in late dealings, with follow-through buying pushing it marginally above last month's peak.
The Australian dollar saw a mixed performance, slipping to a five-day low near $0.6845 during the European morning, with a potential next target of $0.6820.

European Markets
The UK’s PMI, revised slightly lower, is holding up better than the eurozone’s. However, the UK economy showed signs of stagnation in June and July. In an interview with The Guardian, BOE Governor Bailey hinted at a shift toward a more aggressive easing policy. This led to a drop in sterling, which broke below the $1.3200 support level, nearing $1.31.
The euro also struggled, falling for the fourth consecutive session yesterday. It dipped below Tuesday’s low of around $1.1045, dropping slightly under $1.1035 as European trading ended. So far today, it has edged further down to $1.1025.

American Markets
The US is set to release a full slate of economic data today, though the September employment report due tomorrow is expected to have a bigger market impact. The US economy is tracking close to 3% growth for Q3, and today’s data are unlikely to significantly alter that outlook. However, the market remains particularly sensitive to the ISM services data over the final PMI readings.