EUR/USD fell in Asia on comments from ECB chief economist Stark that Europe could see a temporary dip into deflation, though he does not see a deflationary spiral. The ECB will use all tools at its disposal to avoid this, he said, raising hopes for a deep rate cut tomorrow.
The euro also weathered a drop in the service-sector purchasing managers index to 45.8 from the flash estimate a few weeks ago at 46.9 and September’s 48.4.
European stocks are lower and US stock futures are soft as well, helping take the steam out the euro rebound which reached 1.2988 before stalling. ADP is up in about thirty minutes, and should be taken with a big grain of salt after a big miss last month. The expectation is for a 100k drop in ADP. ISM non-manufacturing data follow at 10 AM New York time.
After the data is out of the way, the market will play cabinet-roulette, spinning the wheel to fill key government posts.
