• The ECB meets later this week, what to expect?
• US August NFIB small business optimism index 91.2 vs 93.7 prior
• It’s debate night in the US
• A short-term bottom for USD/JPY?
• European equities open slightly lower to start the day
• What are the main events for today?
• Eurostoxx futures -0.3% in early European trading
• UK July ILO unemployment rate 4.1% vs 4.1% expected
• Germany August final CPI +1.9% vs +1.9% y/y prelim
• Japan LDP lawmaker Ishiba says key task for Japan is to completely exit from deflation
• TradeLocker: The Future of Trading for Brokers and Prop Firms
• FX option expiries for 10 September 10am New York cut
• A breakdown of China’s trade data for the month of August
• UK labour market data in focus in the session ahead
• China records ¥649.34 billion trade surplus in August
• Dollar holds steady after recent rebound

Markets:

• NZD leads, CAD lags on the day
• European equities lower;
  S&P 500 futures down 0.03%
• US 10-year yields up 1 bps to
  3.719%
• Gold up 0.02% to $2,506
• WTI
  crude down 1.12% to $67.94
• Bitcoin
  up 0.22% to $57,165

It’s been another
quiet session. The mood in the markets has been mixed and the moves have been
shallow.

We got just two notable releases: the UK jobs data and the US NFIB small business optimism index. The former came out generally better than expected, although the August payrolls figure printed negative. The latter disappointed with the index dropping to a two-months low.

There’s nothing else for the day except BoC’s Macklem speech at 12:25 GMT/08:25 ET.

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

It is not too uncommon to see the ECB not hog the spotlight during policy decision weeks. But when it is accompanied by a change in rates, that is a bit uncommon. This week though will be one of those weeks, as the ECB has already well telegraphed a 25 bps rate cut for this month.

So, the question now is what will come next?

For now, arguably more of the same. They can’t pre-commit to another move just yet and they cannot outright declare victory against inflation just yet.

The good news perhaps is that the economy is not slowing at a recession-like pace, forcing them to go faster in the cycle. It seems like things are just about right for the ECB at the moment.

Some policymakers have come out to say that one rate cut every quarter seems to be ideal currently. And I don’t think Lagarde will want to fight that this week. She may not be explicit about it but she surely won’t rule it out either. That considering the recent progress in economic developments.

As such, there won’t be much to scrutinise from the ECB policy decision this week. That unless we do get a surprise in terms of language from Lagarde. But by now, she should not make such a rookie mistake.

Market players are pricing in ~63 bps of rate cuts for the remaining three meetings this year. That just means it’s a toss up between two 25 bps rate cuts or three. And that will depend on the data in the weeks and month ahead, more so than the ECB decision.

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

This erases the jump from the previous month and is the 32nd straight month that the index remains below its 50-year average of 98. Looking at the details, the most notable is a jump in the uncertainty index to 92 – up 2 points from July. That’s the highest reading since October 2020. It is perhaps a signal of volatility anticipation, especially with markets playing push and pull on Fed rate pricing and the elections coming up.

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

It’s been a brutal month
for crude oil as renewed growth fears pushed the market into new lows. The
negative supply news from Libya
and Iraq,
and the delay by OPEC+ to increase production from October
didn’t help much to slow down the bearish momentum.

The markets have been
waiting for the US NFP to get some more clarity on the labour market
but instead we got a mixed report with some better details under the hood. That
should be good news at the margin as the Fed is still going to ease policy into
a resilient economy.

The positioning in crude
oil is at a record 13 years low and a contrarian would see this as an
opportunity to go against the consensus with the Fed’s easing likely spurring
activity in the manufacturing sector and increasing demand.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil sold off all the way down to the 67.68 low where it consolidated
since last Friday. This is where we can expect the buyers to step in with a
defined risk below the level to position for a pullback into the 71.67 level.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 64 support
zone.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a downward trendline defining the bearish momentum. We
can expect the sellers to keep leaning on the trendline to position for further
downside, while the buyers will want to see the price breaking higher to
increase the bullish bets into the 71.67 resistance.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we now have a tight range between the 67.60 support and the 69.00
resistance. The buyers will want to see the price breaking higher to position
for a rally into the 71.67 resistance, while the sellers will look for a break
lower to increase the bearish bets into new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Small Business Optimism Index. Tomorrow, we get the US
CPI report. On Thursday, we have the latest US Jobless Claims figures and the
US PPI data. On Friday, we conclude the week with the University of Michigan
Consumer Sentiment report.

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

As a reminder, the debate will take place later in the day at 9pm EDT (or 0100 GMT the next day). I shared some thoughts previously in this post here: Just a week to go until the next US presidential debate

As with these things, it often comes down to how things are said rather than what is said on the stage. One only has to look to the previous debate involving Biden and Trump to understand that. Biden pretty much defeated himself and it was a walk in the park for Trump. And that paved the way for Harris to step up to the plate now.

Will Harris be able to appear presidential enough while shooting down Trump’s tirade of personal attacks? Will she have the wits about her to launch her own offensive against Trump? Or will we see Trump bully his way to another debate „victory“? And what about each of their own economic promises and vision? How much of the debate will focus on that this time around?

Those will be things to keep an eye out for, even if they might not directly impact the market outlook – at least for now.

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