• USD/JPY on the edge as yields look to leg down further
• What are the main events for today?
• BOJ’s Takata: No preset idea on any ceiling for rates
• BOJ’s Takata: No specific timing in mind in scrutinising economy, price developments
• ECB seen cutting rates next week and then again in December – poll
• Eurozone July retail sales +0.1% vs +0.1% m/m expected
• Germany July industrial orders +2.9% vs -1.5% m/m expected
• Germany August construction PMI 38.9 vs 40.0 prior
• UK August construction PMI 53.6 vs 54.9 expected
• PBOC to continue to implement supportive policy, says deputy governor

Markets:

• EUR and GBP lead, USD and CAD lag on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields flat at 3.768%
• Gold up 0.9% to $2,516.01
• WTI crude up 0.5% to $69.53
• Bitcoin down 2.2% to $56,740

It was a modestly quiet session and understandably so, as market players are waiting on key US data later before making their move.

Coming up, we will have the ADP employment change, weekly initial jobless claims and ISM services PMI all to work through. So, traders are not really committing too much for the time being.

The dollar was lightly changed for the most part but is now marginally lower at the balance across the board. EUR/USD held around 1.1080-90 mostly but is now up by 0.2% to 1.1105. Similarly, GBP/USD held mostly around 1.3150-60 during the session before inching up to 1.3170 currently.

The moves are not too drastic by any stretch of the imagination. But it certainly spells out caution for the dollar, especially after the softer JOLTS job openings yesterday.

USD/JPY remains one of the more volatile pairs with it nudging lower to 143.05 after BOJ Takata’s comments earlier in the day. The pair then bounced back to 143.50 and is keeping thereabouts, down just 0.1% on the day.

In the equities space, European indices opened lower but are now keeping more mixed as US futures pared marginal losses to sit barely higher on the day. Treasury yields are also not doing a whole lot as all eyes are fixated on key US data to come.

Looking over to commodities, oil is trying to stay afloat after yesterday’s setback but is still keeping below $70 on the day. Meanwhile, gold is looking poised in trying to angle for a stronger breakout as it hovers around $2,516 now.

It’s all on the US data later to drive the next move in markets before the non-farm payrolls tomorrow.

This article was written by Justin Low at www.forexlive.com.

The poll shows that 64 of 77 economists (~85%) predict the ECB will cut rates by 25 bps at next week’s meeting and then again in December. Four other respondents expect just one 25 bps rate cut for the remainder of the year while eight are seeing three rate cuts in each remaining meeting.

In the August poll, 66 of 81 economists (~81%) saw two more rate cuts for the year. So, it’s not too major a change up in views.

For some context, the ECB will meet next week and then again on 17 October before the final meeting of the year on 12 December.

Looking at market pricing, traders have more or less fully priced in a 25 bps rate cut for next week (~99%). As for the remainder of the year, they are seeing ~60 bps of rate cuts at the moment. Looking further out to the first half of next year, there is ~143 bps worth of rate cuts priced in.

The nearly two-and-a-half rate cuts priced in for the rest of 2024 is going to be an interesting one to keep up with in the months ahead. The ECB seems to be leaning towards a rate cut roughly once in every three months, skipping one meeting. So, that’s what economists are picking up on I guess. For some background: A growing rift at the ECB on the economic outlook?

This article was written by Justin Low at www.forexlive.com.

This week the growth fears
came back as the we got a couple of soft US data. Most of the weakness can be
attributed to the ISM Manufacturing PMI which disappointed as it missed
expectations, and the new orders index dropped further into contraction.

Overall, the report was
much better than the prior month, but it looks like the market wants to err on
the defensive side heading into the NFP report tomorrow. We also got the US Job Openings data yesterday, but it was July’s
data which was bad for many other indicators as it looks like short term
factors negatively affected the data.

We are going into the NFP
report with a 50/50 chance of either a 25 bps or 50 bps cut at the upcoming
meeting, so the data tomorrow will decide by how much the Fed is going to cut.

In today’s context though,
weaker labour market data and the prospect of a 50 bps cut might not be enough
to lift the stock market and could actually lead to more downside on
recessionary fears, so that’s something to keep in mind.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq eventually couldn’t break back above the 19728 level and
sold off into the 18900 level as the US data disappointed the market. The next support is near at 18737 level where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs. The sellers, on the other hand, will want to see the price
breaking lower to increase the bearish bets into the major trendline.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price got rejected from the swing low level at 19135. This is
going to be a key level the buyers will need to break to position for a rally
into the downward trendline around the 19500 level. The sellers, on the other
hand, will likely lean on the 19135 level to position for a break below the
18737 level.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the rangebound price action as we await the NFP release. Today we will also
get other labour market data but unless we get big surprises, it’s unlikely to
see a breakout today. The red lines define the average daily range for today.

Upcoming Catalysts

Today we have the US ADP, the US Jobless Claims and the US ISM Services PMI.
Tomorrow, we conclude the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The changes among major dollar pairs are roughly 0.1% or less at the moment. And that exemplifies the more tentative mood that is gripping traders in European morning trade. USD/JPY was again the more volatile pair, dipping to a low of 143.05 before bouncing back to around 143.50 levels now. But outside of that, the moves so far today are extremely guarded as traders are eyeing key US data later on.

US futures are flat and 10-year Treasury yields are also now near unchanged at 3.768% on the day.

All together, it suggests that market players are very much waiting on US data later before committing to anything. We’ll have the ADP employment change, weekly initial jobless claims, and then the ISM services PMI all on the data docket.

Following the reaction to the Bank of Canada and JOLTS job openings yesterday, do expect markets to start moving with more vigour after the data today. And all of this will culminate with the non-farm payrolls report tomorrow of course.

For now, the wait continues. The ADP roulette will be up next first and that is in roughly two hours‘ time.

As an aside, one spot to keep an eye out for is gold as well. The precious metal is up 0.8% to $2,515 today and looks poised again to try and chase a firmer breakout.

This article was written by Justin Low at www.forexlive.com.