OIL:  MNI: New Russian Oil Sanctions: Overview and Implications

Contrary to expectations, Germany's IFO Business Climate Index fell in September, bucking its uptrend previously seen this year at 87.7 (89.4 consensus, 88.9 prior, revised from 89.0). Across sectors, services was the main difference to yesterday’s flash PMI release, with IFO seeing a negative sectoral balance for the first time since May while the PMI notably outperformed there. Overall, "hopes for economic recovery suffer a setback", IFO comments. 

• The current assessment (85.7 vs 86.6 cons; 86.4 prior) and expectations (89.7 vs 92.0 cons; 91.4 prior, revised from 91.6) readings were both, unexpectedly, lower than before.
• Across sectors:
  • "In manufacturing, the index declined. Companies assessed their current situation as slightly worse, and expectations became more cautious. New orders experienced another decline. Any glimmers of hope that had emerged among capital goods manufacturers in the previous month have faded."
  • "In the service sector, the business climate deteriorated noticeably. Expectations have grown markedly more pessimistic, and the indicator fell to its lowest level since February. Companies also downgraded their assessments of the current situation. Sentiment deteriorated particularly in the transport and logistics sector."
  • "In trade, the business climate worsened, driven by more pessimistic expectations. However, companies assessed the current situation somewhat more positively. The business climate index rose in retail but fell in wholesale."
  • "In construction, the index increased again following last month’s setback. Companies were slightly more satisfied with current business. Expectations for the coming months continued to brighten."

• The low yielders have been under pressure this morning, with USDJPY notably rising to within 10 pips of the post Fed highs at 148.38. Uncertainty regarding Japanese politics and the upcoming LDP leadership election may be playing its part here, while moving average studies continue to highlight a dominant uptrend for the pair. A resumption of gains would open 149.14, the Sep 3 high.
• Furthermore, the impressive grind higher for the likes of EURJPY and CHFJPY bolster the bearish yen theme. Fresh cycle highs for EURJPY today further consolidate the breach of 173.97 last week, keeping bullish conditions firmly intact. Sights are on 174.86 next, a Fibonacci projection, before the 2024 highs which reside at 175.43, a key medium-term resistance.
• US new home sales is the main data point later today, before Thursday’s US jobless claims data. It’s worth noting that Tokyo CPI is scheduled Friday.