• 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.

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.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 eventually couldn’t break above the 5665 level and
fell into new lows as the sellers piled in on a key breakout on the lower
timeframe and the ISM Manufacturing PMI missed expectations. There’s not much
we can glean from this chart as the market is just waiting for the NFP report.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the failure to break above the 5665 level and then the break
below the trendline which triggered more selling pressure. The price is now
consolidating between the 5506 and 5560 levels. The buyers will want to see the
price breaking higher to position for a rally into the 5665 level, while the
sellers will look for a break lower to increase the bearish bets into the 5432
level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly 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.

• A slower start for major currencies so far today
• Oil jumps amid report that OPEC+ is discussing a delay to planned output hike in October
• Reminder: There is no ADP roulette on the agenda today
• Eurozone August final services PMI 52.9 vs 53.3 prelim
• UK August final services PMI 53.7 vs 53.3 prelim
• US MBA mortgage applications w.e. 30 August +1.6% vs +0.5% prior
• German economy expected to contract this year, says Kiel Institute
• German trade lobby sounds warning as recession clouds circle

Markets:

• JPY leads, USD and CAD lag on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 3.8 bps to 3.806%
• Gold down 0.2% to $2,489.13
• WTI crude up 1.0% to $70.86
• Bitcoin down 2.9% to $56,510

It was a bit of a draggy session for major currencies as there wasn’t too much to work with.

The dollar is marginally lower at the balance, but mostly keeping lightly changed against the rest of the major currencies bloc outside of the Japanese yen. USD/JPY is down 0.4% to just under 145.00, continuing to weave in and out around the figure level. Meanwhile, the rest of the dollar pairs are just 0.1% changed among one another thus far on the day.

That despite equities staying pressured after the selloff yesterday. S&P 500 futures remain pinned down since Asia but the losses aren’t getting much worse as we look towards US trading at least. Bond yields are continuing to look heavy and that is perhaps weighing on USD/JPY as well. 10-year Treasury yields are down nearly 4 bps to around 3.80% currently.

Among the headlines, we did see one involving the oil market. A Reuters report noted that OPEC+ is considering delaying their planned output hike in October. And that saw oil prices bounce back a little with WTI crude moving up by 1% away from the $70 mark before that.

In other markets, gold was under some light pressure earlier in falling to $2,472 but is now climbing back up to $2,489 on the day. The push and pull continues as price action continues to consolidate in and around $2,500, awaiting the next big move.

Coming up later, we will have the Bank of Canada policy decision and US JOLTS job openings as key risk events for markets.

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

• Prior +0.5%
• Market index 230.5 vs 226.9 prior
• Purchase index 136.1 vs 131.8 prior
• Refinance index 751.4 vs 753.8 prior
• 30-year mortgage rate 6.43% vs 6.44% prior

Mortgage applications rose in the past week but the breakdown was a bit more mixed. Purchases jumped but was partially offset by a decline in refinancing activity. That as the average rate of the most popular US home loan remained relatively stable after the recent drop.

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

Reuters is out with the headline, citing three OPEC+ sources in saying that the bloc is discussing a delay to its planned output hike in October. It looks like they are finally not being stubborn about it but it took oil prices falling to its lowest levels this year for them to start rethinking about this. Pfft.

Anyway, the jump here still sees $70 as the key threshold on the daily and weekly charts. And I wouldn’t be too confident about the bounce here lasting unless risk trades also turn around and markets grow less concerned about global growth in the near-term. The US data this week, especially the jobs report on Friday, will be key in determining that sentiment.

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

That opposed to a Trump victory of course, according to Goldman Sachs. The firm argues that economic output will take a hit next year under the Trump banner. And that is mostly from increased tariffs on imports and tighter immigration policies. Adding that jobs growth will also be stronger under a Democrat government as opposed to a Republican one.

„We estimate that if Trump wins in a sweep or with divided government, the hit go growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse, resulting in a peak hit to GDP growth of -0.5% in 2H 2025 that abates in 2026. If Democrats sweep, new spending and expanded middle-income tax credits would slightly more than offset lower investment due to higher corporate tax rates, resulting in a very slight boost to GDP investment due to higher corporate tax rates, resulting in a very slight boost to GDP growth on average over 2025-26.“

On the inflation front, Goldman Sachs says that a Trump win will likely lead to a rise in core inflation amid increased tariffs on auto imports from China and the EU.

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

Yesterday, we got the US
ISM Manufacturing PMI and even though the headline number missed
expectations, under the hood the report was better than the prior month.

The bad news was new orders
falling further into contraction, which is a proxy for demand, and it’s
generally considered as a leading indicator.

Tight monetary policy of
course has been weighing a lot on the manufacturing sector and if the Fed
manages to avoid a hard landing as it cuts rates in the next months, we could
see a rebound in Q4.

From a monetary policy
perspective, the data didn’t change much for the Fed expectations although the
probabilities for a 50 bps cut edged a bit higher. For the RBNZ, the market
sees a 40% probability of a 50 bps cut in October and a total of 75 bps of
easing by year-end.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD is testing a key support
zone around the 0.6175 level where we can find the confluence
of the trendline
and the 38.2% Fibonacci
retracement level. We can expect the buyers to step in with a defined risk
below the trendline to position for a rally into a new high. The sellers, on
the other hand, will want to see the price breaking lower to increase the
bearish bets into the 0.6050 support.

NZDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the setup around the 0.6175 level. There’s also a counter-trendline
defining the bearish momentum of the pullback. The buyers will want to see the
price breaking higher to increase the bullish bets into new highs, while the
sellers will likely lean on it to position for a break below the major upward
trendline.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price consolidated near the trendline with no major reaction from
the ISM Manufacturing PMI. There’s not much else we can glean from this
timeframe as the buyers will just look for a bounce, while the sellers will
look for a break. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Job Openings. Tomorrow, we get the US Jobless Claims
figures and the ISM Services PMI. Finally, on Friday, we conclude the week with
the US NFP report.

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