• US business activity remains solid despite a slump across the Atlantic

• Fed officials don’t see need for another 50-bps reduction

• Dollar holds firm, but investors still expect 75-bps cut by year-end

The flash PMI estimates for the United States did not generate the same doom and gloom as the Eurozone readings did earlier in the day. The services PMI eased slightly in September to 55.4 but beat forecasts of 55.2. And whilst the manufacturing PMI fell to 47.0, defying expectations of an increase, the overall picture for September was one of “robust” business activity according to the S&P Global report.

The PMI data is the latest to cast doubt about the need for aggressive easing after the Fed surprised many last week when it slashed rates by 50 bps. Fed officials have been out and about since Friday to explain why they opted for a larger cut. Inflation declining faster than anticipated appears to have been policymakers’ main concern rather than worries about a slowdown in the jobs market.

However, there seems to be little appetite for further big reductions, with both Waller and Kashkari signalling 25-bps cuts going forward. Yet, investors are still pricing a high probability of a double cut in either November or December.

In FX markets, the US dollar index is holding above the crucial support zone around 100.00. Will it break lower or is a rebound on the cards?