To be fair though, there were a couple of light bids leading up to the sudden jump if you zoom in to the minute-chart. But the big spike came right on the dot as BOE policymaker Breeden said that it would be better to regulate cryptocurrencies under the financial services perimeter rather than under gambling.

After what looked like a breakdown in the charts yesterday, dip buyers are certainly making a stand now in Bitcoin as we see price erase the losses from the day before and then some. The $25,000 mark appears to be where the line is being drawn for now.

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

US:

• The Fed hiked by 25 bps as
  expected and kept everything unchanged at the last meeting.
• Fed Chair Powell reaffirmed their data dependency
  and kept all the options on the table.
• Inflation measures
  since then showed further disinflation.
• The labour market
  displayed signs of softening although it remains fairly solid.
• Overall, the economic data started to surprise to
  the downside lately.
• Last week the ISM Services PMI and Jobless Claims
  surprised to the upside.
• The Fed members are leaning more towards a pause in
  September.
• The market doesn’t expect the Fed to hike at the
  September meeting, but there’s now a 50/50 chance of a hike in November.

Australia:

• The
  RBA kept its cash rate unchanged as widely expected as they are
  seeing signs that the economy is indeed slowing and that will help to return
  inflation back to target.
• The
  data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all missed expectations
  lately.
• The
  Australian PMIs also missed expectations remaining
  in contraction.
• RBA
  Governor Lowe in his speech reaffirmed that if inflation remains sticky, they
  will have to tighten more.
• The
  market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD seems to
be stuck in a range between the 0.6370 support and the
0.6500 resistance. The recent bounce is getting rejected by the red 21 moving average as the
sellers are stepping in here to position for further downside. A break above
the moving average should lead to a rally into the 0.65 resistance.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a divergence with the
MACD recently
which is usually a sign of weakening momentum often followed by pullbacks or
reversals. The target of the pullback should be the 0.66 handle but if the US
data comes out much stronger than expected, then the pair should keep on
dropping and make new lower lows.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have clear levels where the price should react to. A break above the current
resistance around the 0.6440 level should see more buyers piling in to target
the 0.6500 resistance. Another option for the buyers with an even better risk
to reward ratio would be to wait for the price to pull back into the 0.6410
support and position for a rally into the 0.65 resistance with a defined risk
just below the level.

The sellers, on the other hand, are likely
to step in at the 0.6440 resistance with a defined risk above the level to
position for a break below the 0.6410 support and eventually a break below the
0.6370 level.

Upcoming Events

This week we have many important events beginning with
the US CPI tomorrow, which is expected to show an increase in headline
inflation but further disinflation in the core measure. On Thursday, we will
see the latest Australian Jobs report followed by US Jobless Claims, PPI and
Retail Sales data. Finally on Friday, we get the University of Michigan
Consumer Sentiment report.

This article was written by FL Contributors at www.forexlive.com.

The reading is once again below the 49-year average of 98, with this being the 20th month in a row at that. NFIB does note that Q3 economic conditions are looking good with September „needing to be an exceptionally bad month to
negate the solid economic data that came out of July and August“.

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

• Japanese yen surge on Ueda remarks the big story to start the new week
• Japan’s Matsuno: Monetary policy specifics are up to BOJ to decide
• European Commission cuts Eurozone growth forecast amid building recession risks
• PBOC to tighten scrutiny on bulk dollar purchases of $50 million and above – report
• Yuan exchange rate has solid basis to stay reasonably stable – PBOC
• China August M2 money supply +10.6% vs +10.7% y/y expected
• SNB total sight deposits w.e. 8 September CHF468.9 bn vs CHF 467.6 bn prior
• Kremlin confirms North Korea’s Kim Jong Un to visit Russia in the coming days

Markets:

• AUD leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields up 4.6 bps to 4.302%
• Gold up 0.3% to $1,924.28
• WTI crude down 0.6% to $86.96
• Bitcoin down 1.1% to $25,609

The major story so far today remains the surge in the Japanese yen, following weekend comments by BOJ governor Ueda touting a „quiet exit“ from the current ultra easy monetary policy settings.

As European trading began, USD/JPY extended losses by over 1% in a drop to 145.90 before recovering back to around 146.70 levels now – still down by 0.7% or 100 pips on the day.

The unwinding in USD/JPY longs also led to a notable decline in the dollar across the board. The antipodeans benefited the most amid a jump in the Chinese yuan as well, helped by some support from Beijing.

AUD/USD is up 0.9% to 0.6430 and keeping at the highs while NZD/USD is up 0.6% to 0.5915, also maintaining gains for the most part.

The euro and pound are only marginally higher against the dollar with EUR/USD up 0.2% to 1.0720 and GBP/USD up 0.4% to 1.2510 with the latter hoping to stop a run of four straight consecutive daily losses.

As the yen legged higher, it comes as 10-year JGB yields also hit the 0.70% threshold and that is underpinning bond yields in general. 10-year Treasury yields are up 4.6 bps to 4.302%, so that is also one to watch as it threatens the August highs. The dollar might be pressed lower now but higher yields could yet be a saving grace for the greenback.

In the equities space, stocks are capitalising on the softer dollar with European indices and US futures holding a slight advance. But we’ll see if there is appetite to keep that going through the week, with the US CPI report coming up on Wednesday.

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

It’s been more than two decades but it still feels surreal to think back to the events that transpired on this day in 2001. It was a tragic day by all accounts and the world was never the same after. To those who have experienced the tragedy of it all, I continue to offer my heartfelt wishes and condolences to those who have suffered the pain and loss.

I remember watching everything take place on the news and when I woke up the next day, I had to question if it was all a dream or if this truly happened. Life was a simpler time back then but it doesn’t take away from the meaning and the significance of the role of the attacks in the geopolitical arena.

In a time where social media has made information and mass communication are so readily available, one can only wonder if we are truly better off and better prepared to prevent something like this from ever happening again. I would like to think so. And hopefully, that is certainly the case. That being said, the rapid evolution of technology can also be a dangerous thing. So, here’s to hoping that we do learn and use it the right way for the future.

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

It will be Kim’s first international visit in more than four years and the first since after the Covid pandemic. His last trip was also to Russia back in 2019, in a meeting with Putin after the collapse of North Korea’s nuclear disarmament talks with the US (Trump was the president at the time).

This time, Kim will also be visiting Vladivostok for the 8th Eastern Economic Forum in Russia – in which China vice premier, Zhang Guoqing, has confirmed his attendance.

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

Last week the US data surprised to the upside with
the ISM Services PMI and Jobless Claims beating
expectations by a big margin. The market didn’t like the strong data as it
raises the chances of another rate hike in November. In fact, the Nasdaq
Composite sold off following the PMI beat with some consolidation thereafter,
even after the strong Jobless Claims. The market seems to be trading on “good
news is bad news” at the moment, but the outlook remains uncertain.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite retested the broken trendline and sold
off following the strong US data release into the red 21 moving average where it
bounced as the buyers stepped in. The moving averages are still crossed to the
upside, so the bias remains bullish, but the buyers will need some key
breakouts to keep on rallying.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price is
trading around the minor upward trendline which is defining the bearish flag pattern.
A break below the trendline should confirm the pattern and lead to a fall into
the 13174 support. The
buyers are likely to step in here targeting a break above the 13850 resistance
to invalidate the bearish setup.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the key 13850 resistance zone that is likely to decide where we will go
next. In fact, a break above the resistance zone and the downward trendline
should invalidate the bearish setup and give the buyers more conviction to
target a new higher high. The sellers, on the other hand, are likely to pile in
here around the resistance with a defined risk above it and target a selloff
into the 13174 support.

Upcoming
Events

This week is likely to be a volatile one given the
release of top tier economic indicators including the US CPI. In fact, on
Wednesday we get the US CPI report, which is expected to show an acceleration
in the headline inflation but a deceleration in the core measure. On Thursday,
we get the US PPI, Retail Sales and Jobless Claims data. Finally, we conclude
the week with the University of Michigan Consumer Sentiment report on Friday.

This article was written by FL Contributors at www.forexlive.com.

If you’re interested in
forex trading, it’s crucial to learn the basics of forex
liquidity. Understanding liquidity in the foreign exchange market is
essential for traders to make informed decisions and navigate the market
effectively.

The forex market, with
its vast daily trading volume and constant price fluctuations, offers lucrative
opportunities for traders worldwide. However, to succeed in this fast-paced
environment, it is essential to understand the concept of forex market
liquidity and its profound impact on trading outcomes.

Liquidity acts as the
lifeblood of the forex market, influencing everything from trade execution to
price stability. In this article, we will learn the basics of forex
liquidity,
exploring its significance and the ways it can shape trading strategies.

What is Forex Liquidity?

Forex
liquidity refers to the degree of ease and efficiency with which a currency
pair can be bought or sold in the foreign exchange (Forex) market without
causing substantial price fluctuations. It measures the depth and availability
of market participants, including buyers and sellers, and their ability to
execute trades promptly at competitive prices

In the realm of trading,
Forex liquidity plays a vital role in
determining the efficiency and effectiveness of transactions.

It revolves around the
ease and speed with which currency pairs can be bought or sold without causing
significant price fluctuations. When the forex market exhibits high liquidity,
traders can swiftly execute trades at prices that reflect the current market
conditions. On the other hand, low liquidity can result in challenges such as
wider spreads and higher transaction costs, making it more difficult to enter
or exit positions without impacting market prices.

Therefore,
understanding and considering liquidity is crucial for traders seeking to
navigate the forex market successfully.

Forex Market Liquidity has an enormous impact on
trading. Let’s discuss some of the
points here.

Execute trades with speed and
efficiency: In periods of abundant liquidity, the presence of numerous
buyers and sellers makes it significantly easier to find counterparties for
your trades. As a result, you can swiftly enter and exit positions without the
worry of missing out on favourable opportunities.

Price Stability: Forex market liquidity contributes to price
stability, reducing the likelihood of sudden and drastic price swings. A liquid
market absorbs large orders without significant price disruptions, providing
traders with more accurate price information. This stability allows traders to
make informed decisions and reduces the risk of slippage during volatile market
conditions.

Secure more favourable trade prices: Heightened liquidity
fosters intensified competition among market makers, driving them to offer the
most competitive prices. Consequently, you have an increased likelihood of
obtaining advantageous prices for your trades, maximizing potential
profitability.

Minimize slippage: Slippage, the disparity between the expected
trade price and the actual execution price, is typically reduced when liquidity
is high. The greater number of buyers and sellers in the market allows for
smoother trade execution, minimizing the potential for significant price
deviations during the transaction process.

Market Depth: Liquidity is reflected in the market depth,
representing the number of orders available at various price levels. A deep
market indicates ample liquidity, offering traders a higher level of
flexibility in executing their trades. Traders can choose to transact at their
preferred price levels, benefiting from competitive pricing and reduced order
rejections.

Low Liquidity: Trading under conditions of low liquidity can
present challenges and heightened risks. In such scenarios, the scarcity of
buyers and sellers in the market can make it more arduous to locate
counterparties willing to engage in trades opposite to yours. As a result,
wider spreads between bids and ask prices may emerge, leading to increased
slippage and potentially impacting your trading outcomes.

Several factors can influence the level of liquidity in a
market:

Market size: Generally, larger markets exhibit higher
liquidity compared to smaller ones. The presence of a greater number of buyers
and sellers in larger markets makes it easier to find counterparties for
trades, thus enhancing overall liquidity.

Time of day: Liquidity levels tend to vary throughout the
trading day. Major trading sessions, such as the London and New York sessions,
typically experience higher liquidity due to increased market participation
during these active periods.

News events: Significant news announcements can have a
notable impact on market liquidity. For instance, if there is an unexpected
announcement regarding a central bank’s interest rate hike, liquidity may
decrease as traders adjust their positions, causing a temporary drying up of liquidity.

Economic news: Economic news releases can have a significant
impact on forex liquidity. If a news
release is unexpected or market-moving, it can lead to increased volatility and
illiquidity.

Holidays: Holidays. Forex markets are typically closed on
holidays. This can lead to decreased liquidity in the days leading up to and
after holidays.

How to Trade in Liquid Markets?

If you are a forex
trader, it is important to understand the concept of liquidity and how it can
affect your trading. When trading in liquid markets, you can be more confident
that your orders will be filled quickly and at the desired price. You will also
be less likely to experience slippage. Additionally, liquid markets tend to
have lower spreads, which can save you money on your trading costs.

If you are new to forex
trading, it is a good idea to start by trading in liquid markets. This will
help you to learn the ropes and avoid some of the risks associated with
illiquid markets. As you gain experience, you can start to trade in less liquid
markets, but it is important to do so with caution.

Traders must consider
these factors when planning their trading activities, as understanding the
dynamics of liquidity can help optimize trade execution and manage potential
risks more effectively.

Here are some tips for trading in liquid markets:

· Trade during the most
liquid times of the day. This is typical during the European and American
trading sessions.

· Avoid trading during
holidays and periods of political uncertainty. These times can lead to
decreased liquidity and increased volatility.

· Use a reputable broker
with a good reputation for liquidity. Yamarkets is one of the most reputable
brokers that help traders to ensure that traders‘ orders are filled quickly at
the desired price.

· Start with small trades
and gradually increase your size as you become more comfortable. This will help
you to manage your risk and avoid large losses.

How to Measure Forex Liquidity?

There are a few
different ways to measure forex liquidity. Some of them are as follows

Volume: One common measure is the volume of trading. The more
volume there is in a currency pair, the more liquid it is. Another measure of
liquidity is the bid-ask spread. A narrower bid-ask spread indicates a more
liquid market.

Bid-Ask Spread: One common measure of liquidity is the bid-ask
spread. This is the difference between the highest price a buyer is willing to
pay (bid) and the lowest price a seller is willing to accept (ask). Narrow
spreads indicate high liquidity, while wider spreads can suggest lower
liquidity. For instance, in cryptocurrency trading classes, you might learn
that major currency pairs like EUR/USD tend to have tighter spreads due to
their high liquidity.

YaMarkets a reputable
forex broker with a strong liquidity provider network is a great choice to
choose for the optimal trading experience. YaMarkets has a wide range of
products, a user-friendly platform, competitive spreads, and a reliable
customer support team. It is a good choice for traders of all levels of
experience.

This article was written by FL Contributors at www.forexlive.com.

UPCOMING EVENTS:

• Tuesday:
  UK
  Labour Market report, German ZEW, US NFIB Small Business Optimism Index.
• Wednesday: Japan
  PPI, UK GDP, EZ Industrial Production, US CPI.
• Thursday:
  Australia Labour Market report, Japan Industrial Production, Switzerland
  PPI, ECB Policy Decision, US Jobless Claims, US PPI, US Retail Sales.
• Friday: NZ
  Manufacturing PMI, China Industrial Production and Retail Sales, Eurozone
  Wages data, US University of Michigan Consumer Sentiment.

Tuesday

The UK Unemployment Rate is expected to
rise to 4.3% vs. 4.2% prior, but the market will likely focus more on the wages
data which is seen matching the prior readings with the Average Earnings
ex-Bonus at 7.8% and Average Earnings incl. Bonus at 8.2%. The September rate
hike is basically a done deal at this point, so this report should influence
the market pricing beyond September.

Wednesday

The US Headline CPI Y/Y is expected to rise
to 3.6% vs. 3.2% prior, while the M/M reading is seen at 0.6% vs. 0.2% prior.
The jump in Headline CPI is due to higher energy prices, which should be
temporary, in fact the Fed is focused on the Core measures. The Core CPI Y/Y,
which excludes the volatile food and energy prices, is expected to fall to 4.3%
vs. 4.7% prior, while the M/M figure is seen again at 0.2% vs. 0.2% prior.
Unless this report is uncomfortably hot all around, it’s unlikely to change the
market’s pricing for the September meeting, which sees the Fed to hold rates
steady. In fact, the debate now is more about the November decision, and most
importantly when the Fed will start to cut rates.

Thursday

The ECB is expected to keep the deposit
rate steady at 3.75%, but in reality, it’s more of a coin toss with the rate
hike probability standing around 60%. The data has been surprising to the
downside lately and the deterioration has been fast. Inflation and labour
market indicators though are still strong, and the central bank may fear that
it might take too much time to get back to the 2% target. In fact, the longer
high inflation stays in the system, the higher the chances that inflation
expectations de-anchor and the harder it will be to bring it down later.

The US Jobless Claims remains a key weekly
labour market indicator and it’s been showing continued strength with the data last
week beating expectations by a big margin.
This week the consensus sees Initial Claims at 226K vs. 216K prior, while
Continuing Claims are seen at 1693K vs. 1679K prior.

Friday

Chinese Industrial Production Y/Y is
expected at 4.0% vs. 3.7% prior, while Retail Sales Y/Y are seen at 2.8% vs.
2.5% prior. The data will show how the activity in the second largest economy
in the world is faring after many big misses the last month.

The University of Michigan Consumer
Sentiment is expected to fall to 69.2 vs. 69.5 prior. The prior
final report was revised downwards from the preliminary readings, in line with
the big
miss in the Conference Board Consumer
Confidence report. The UMich survey is more weighted towards consumers
finances, while the Conference Board towards the labour market sentiment.
Therefore, given the higher energy prices, we can expect a lacklustre report
and probably higher inflation expectations.

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

Week Ahead 11th-15th September

• MON: Norwegian CPI (Aug)
• TUE: EIA STEO, OPEC MOMR; Swedish Unemployment (Aug), UK Unemployment (Aug) & Wages (Jul), NorwegianGDP (Jul), Germany/EZ ZEW (Sep)
• WED: IEA OMR; UK GDP Estimate (Jul), US CPI (Aug)
• THU: ECB Policy Announcement, Norges Bank Regional Network; Australian Employment (Aug), Swedish CPIF (Aug),US Retail Sales (Aug), IJC (w/e 4th Sep), New Zealand Manufacturing PMI (Aug)
• FRI: Quad Witching, CBR Policy Announcement, ECB TLTRO Repayment Publication; Chinese Industrial Output/Production, Retail Sales, House Prices (Aug), EZ Trade Balance (Jul), US Export/Import Prices (Aug), IndustrialProduction (Aug), NY Fed Manufacturing (Sep), Uni. of Michigan Prelim. (Sep)

NOTE: Previews are listed in day order

NORWEGIAN CPI (MON): The prior reading was broadly in-line with the Norges Bank’s own forecast and cemented expectations for the 25bp hike that was delivered in August. The August inflation release will be carefully scrutinised, firstly for signs of the energy upside that has been seen in other European inflation metrics, and secondly for any indication that such pressure is having an impact on other areas of the economy. Irrespective of the release, the Norges Bank has already guided participants towards another hike occurring in September given inflation remains markedly above target. Instead, the data will be more influential when assessing the new policy rate path, which as of June’s MPR, looks for an end-2023 peak in the tightening cycle just shy of 4.25%. Evidently, if September sees a 25bp hike then this peak will be subject to an automatic upward revision, with the August inflation data and upcoming regional network survey likely the key factors in determining how much, if any, further tightening will be priced.

UK UNEMPLOYMENT AND WAGES (TUE): Expectations are for the unemployment rate in the 3M period to July to rise to 4.3%, whilst average earnings (ex-bonus) in the 3M/YY period to July are expected to fall to 7.6% from 7.8%. The prior report saw an unexpected jump in the unemployment rate to 4.2% from 4.0%, whilst wage growth remained stubbornly high at 8.2% in the 3M/YY period for June with the caveat that the total growth rate was affected by the NHS one-off bonus payments made in June. This time around, ING flags that the September rate decision will hinge on three variables – services inflation (due the day before the next meeting), private sector wage growth and the vacancy/unemployment ratio (both due on Tuesday). For Tuesday’s data, ING expects that headline wage growth will likely remain around 8.2%, albeit “there’s an outside risk that we see this nudge slightly lower, on the basis that separate data from firms‘ payrolls indicated that median pay actually fell in level terms during August”. Elsewhere, the desk expects a further modest rise in unemployment, as well as a renewed fall in vacancies. From a policy perspective, the BoE’s September meeting is widely expected to see the MPC deliver another 25bps hike and therefore, the upcoming release might be more relevant for pricing beyond September, whereby markets assign a circa 60% chance of another hike by year-end.

UK GDP ESTIMATE (WED): A consensus is yet to be published for the data. The prior report saw M/M growth of 0.5% in June with the better-than-expected outturn attributed to a ramp-up in manufacturing production. This time around, analysts at Pantheon Macroeconomics (forecast -0.2% M/M) expect the upcoming release will likely show that the economy is sluggish but not sliding into recession. Looking under the hood, PM says it would “be shocked if manufacturing output didn’t fall in July, after June’s 2.2% month-to-month increase”. Looking beyond the upcoming release, PM continues to expect GDP to rise by 0.2% quarter-on-quarter in Q3 and by 0.3% in Q4, underpinned by a pick-up in households’ real disposable income. From a policy perspective, it is likely that expectations for the September meeting will be guided more by developments in the labour market and on the inflation front with some in the market potentially cynical over relying too heavily on GDP data given the recent ONS revisions which revealed that the UK economy had returned to pre-pandemic levels much quicker than previously thought.

US CPI (WED): Headline inflation is expected to rise 0.5% M/M in August, picking up in pace versus the 0.2% M/M printed in July; the core rate is seen up 0.2% M/M, matching the prior month. Higher energy prices are likely to drive the headline up, but the core rate is seen steady. „While inflation will continue to moderate, the path to 2% price growth will be slow and rocky,“ Moody’s writes, „the ongoing decline in used-vehicle prices will provide some downward pressure, but the biggest shoe yet to drop is related to housing and rent prices, where weakness from late 2022 has yet to show up in the CPI.“ Fed officials have recently been striking a balanced approach to guiding policy, welcoming the progress already made in bringing price pressures down, but noting that there is still further to go, while generally caveating their policy views around incoming data. From the market’s perspective, the FOMC has already reached its terminal rate, and instead, the focus appears to be on when the central bank will begin to cut rates. Recent data releases have seen the timing swing towards May when the data has been weak, and out to July when data has been strong; the CPI data is likely to continue this pattern.

ECB ANNOUNCEMENT (THU): 39/69 analysts surveyed by Reuters expect the ECB to stand pat on the deposit rate at 3.75% with the remaining 30 looking for a 25bps hike to 4.0%. Market pricing leans more in favour of a “pause” with such a move priced at around 63%. As a recap of the July meeting, Lagarde noted that the September decision will be based on the data and the Governing Council is „open-minded“. Since July, Q2 Q/Q growth was revised lower to just 0.1% from 0.3% whilst more timely survey data saw the Eurozone composite PMI in August fall to 46.7 from 48.6 with the accompanying release noting that “The disappointing numbers contributed to a downward revision of our GDP nowcast which stands now at -0.1% for the third quarter”. As such, the narrative around the Eurozone’s growth outlook is a particularly negative one. Furthermore, interest rate increases are clearly having an impact on lending in the Eurozone with bank lending to the private sector at just 1.6% Y/Y in July. That being said, the fight against inflation is far from being won with August HICP holding steady at 5.3% Y/Y, the super-core reading still at an elevated level of 5.3% Y/Y and 5y5y forward expectations around the 2.6% mark. This puts the ECB in a bind of needing to be cautious in the face of slowing growth but not conveying a sense of complacency over inflation. Even though inflation is set to fall throughout the remainder of the year, the ECB has been consistent in its messaging that it will be following the actual data rather than projections; such a stance, it could be argued, would suggest that the Bank still has one more hike in its locker. Hawkish bodies on the GC such as Kazimir and Knot appear to subscribe to this view with the former suggesting that one more hike is still required; it remains to be seen how close to a consensus view this is on the GC with President Lagarde continuing to stress the Bank’s meeting-by-meeting approach. If the ECB opts to keep rates steady, ING suggests “…an earlier end to PEPP reinvestments could eventually be the bargaining chip the doves would have to accept for the hawks to agree to a pause”. For the accompanying macro projections, consensus expects the medium-term 2025 inflation projection to be revised lower to 2.1% from 2.2%.

AUSTRALIAN EMPLOYMENT (THU): participants will be eyeing the report to see if the labour market rebounds following the surprise contraction in July. As a reminder, the prior seasonally-adjusted reading was disappointing as the Employment Change showed an unexpected 14.6k decline in jobs (Exp. 15.0k increase), which was solely driven by a drop in full-time jobs and the Unemployment Rate rose to 3.7% vs. Exp. 3.6% (Prev. 3.5%), although in trend terms, employment actually increased by more than 27k and unemployment was steady at 3.6%. There are currently no expectations yet for the upcoming data, while the release is not likely to have any major ramifications on RBA policy with the central bank more focused on inflation and given the upcoming changes, including the impending handover of leadership to Deputy Governor Bullock this month who will steer the Bank through next year’s scheduled reforms.

SWEDISH CPIF (THU): July’s CPIF release was incrementally softer than market expectations, but at 6.4% YY remained above the Riksbank’s 5.9% 2023 forecast and well above the 2% target level. As with other regions, the data will be scoured for any indications that the recent upturn in energy prices is making itself known. In addition, the Riksbank will be attentive to potential signs of the upside influencing other areas of the economy. For the Riksbank, the inflation data may factor into the communication used, but is unlikely to have much bearing on guidance for at least one more hike this year. On that, desks have been lifting their calls for the Riksbank given continued SEK weakness and the Bank’s ongoing verbal intervention against it; for instance, the likes of Nordea expect hikes in September and November to a 4.25% peak.

US RETAIL SALES (THU): Retail sales are expected to rise 0.2% M/M in August, cooling from the 0.7% gain in July. The ex-gas and autos measure is seen rising 0.4% M/M, down from a rate of 1.0% in July. While the data set will offer a glimpse on the health of the consumer amid concerns that the economy may slow significantly in the months ahead, traders will also be watching the University of Michigan’s prelim survey release due Friday, where the rise in energy prices is likely to have weighed on sentiment.

CHINESE ACTIVITY DATA (FRI): Retail sales Y/Y in August are expected to rise by 2.8% (prev. 2.5%), whilst there is currently no consensus for Industrial Production metrics. The data will be closely watched to diagnose the health of the world’s second-larger economy and to gauge the drip-feed of stimulus seen over recent weeks. Using the anecdotal commentary from Caixin PMIs as a proxy, the release suggests that “Trends diverged on a sector basis, with a renewed upturn in manufacturing sales counteracting a growth slowdown in the service sector.” The Senior Economist at Caixin noted “Overall, the manufacturing sector improved in August, the services sector grew at a slower pace, and there was still considerable downward pressure on the economy… Looking ahead, seasonal impacts will gradually subside, but the problems of insufficient domestic demand and weak expectations may form a vicious cycle for a protracted period of time.” To recap, the July data saw several downside surprises. Chinese Industrial Production YY printed at 3.7% vs. Exp. 4.4%, Chinese Retail Sales YY at 2.5% vs. Exp. 4.5%, and Chinese Urban Investment YTD YY 3.4% vs. Exp. 3.8%. The PBoC that day cut the MLF rate, the 7-day Reverse Repo rate, and the 7-day and 1-month SLF rates. ING analysts at the time warned, “Now the idea of a consumer-spending-led recovery is looking very vulnerable.”.

This article originally appeared on Newsquawk

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