The U.S. Dollar is trading in strong ranges, erasing any losses experienced last week as equity markets start last third of the year on a sour note
Overview
Markets are suffering a back-to-school shock as they continue to weigh the odds of the Fed reducing current interest rates at their next meeting. Gold has reached a fresh all time high and US 30-year yields are at their highest level in the last month on the back of bets that we will see a 25 basis point cut in September.
Despite a cut being all but guaranteed, with a greater than 89.0% likelihood, the US labor market remains in focus ahead of the Fed’s policy meeting on September 17th. Manufacturing PMI this morning and Trump’s announcement this afternoon with an as-of-yet undisclosed purpose will be the two biggest movers for USD ahead of Non-Farm Payrolls on Friday. Should things come in below expectations on Friday, markets will roar for a cut even more than they are now.
What to Watch This Week…
- JOLTS Job Openings Wednesday 10AM
- Factory Orders Wednesday 10AM
- Purchasing Managers Index Thursday 9:45AM
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro weakened against the dollar as inflation unexpectedly accelerated in August, with core inflation holding at 2.3% versus expectations of 2.2%. Long term debt yields are also hitting multi-year highs as investors grow increasingly worried about financial stability, with France seeing the highest levels since 2009 and Germany since 2011. Markets are anticipating no reduction in interest rates ahead of the European Central Bank’s policy meeting on September 11th.
MXN ⇓
Similar to the shared currency, Pound Sterling has slid 1.3% to it’s worst position since early August as long term yields jump to their highest point in nearly 30 years. Finance Minister Rachel Reeves is expected to hike taxes to keep in line with fiscal targets. This week we will get to look at PMI’s for the country along with Retails Sales. Next week we will get a clearer picture of the economy looking at monthly and 3-month Gross Domestic Product.
