After the relatively calmer mood throughout European morning trade, US futures are now starting to take a bit more of a hit on the day. S&P 500 futures are now down by 0.2% with Nasdaq futures down 0.3%. That is keeping a drag on the softer mood in European indices as well as we look towards the session ahead.

Just be wary that the UAW strikes are still an issue and that is one negative factor that is weighing on sentiment ahead of the return of Wall Street from the weekend later.

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

The PBOC is out with some comments noting that China will improve its policies and create a more market-oriented and international-level business climate. I would look past the smoke and mirrors here as the meeting seems to involve the forex regulator for some reason. Also, there are plenty of things going on behind the scenes in China right now. Not least after this report from last week:

• PBOC calls on banks to hold off on immediate dollar purchases – report

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

The latest results from Reuters‘ poll on economists on the SNB ahead of the policy meeting decision this week:

• 30 of 37 economists expect another 25 bps rate hike this week
• The majority then sees the SNB keeping rates unchanged at 2% until at least middle of next year

As the Fed and ECB also move to the sidelines, other major central banks will also feel compelled to do so amid a slowdown in global economic conditions. I think the SNB can manage that quite well as inflation pressures are not as high and stubborn compared to other countries. If anything, it will be more interesting to see how the BOE manages this particular tightrope in this week’s meeting communique.

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

• Residual differences remain between central bank communications and market expectations
• Current build-up of leveraged shorts in Treasury futures is a vulnerability worth monitoring

These are already well in the consideration of market participants, without needing to be said really. It is all part of the bigger picture narrative as seen here.

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

UPCOMING EVENTS:

• Monday: NZ
  Services PMI, US NAHB Housing Market Index.
• Tuesday: RBA
  Meeting Minutes, Canada CPI, US Building Permits and Housing Starts.
• Wednesday: PBoC
  LPR, UK CPI, BoC Summary of Deliberations, FOMC Policy Decision.
• Thursday: NZ
  GDP, SNB Policy Decision, BoE Policy Decision, US Jobless Claims.
• Friday: Japan
  CPI, BoJ Policy Decision, UK Retail Sales, Canada Retail Sales, Flash PMIs
  for AU, JP, UK, EZ, US.

Tuesday

The Canadian Headline CPI Y/Y is expected
to tick higher to 3.8% vs. 3.3% prior, while the M/M reading is seen at 0.2%
vs. 0.6% prior. The BoC continues to complain about the slow disinflation in
the underlying measures, which beat expectations in the previous
months although they were lower than the
prior readings. There’s currently no consensus for the core measures but higher
figures would put the central bank in a tough position given the recent rise in
wage
growth.

Wednesday

The UK Headline CPI Y/Y is expected to
increase to 7.1% vs. 6.8% prior, while the M/M reading is seen at 0.7% vs.
-0.4% prior. Such a big increase is due to higher energy prices with the
central banks more focused on the core measures at the moment. The UK Core CPI
Y/Y is expected at 6.8% vs. 6.9% prior, while the M/M figure is seen at an
uncomfortable 0.7% vs. 0.3% prior. This report is unlikely to change the
market’s pricing for this week’s BoE meeting where the central bank is expected
to hike by 25 bps, but it will influence the expectations for the next
meetings.

The Fed is expected to hold rates steady
at 5.25-5.50% but the market’s focus will be on the Summary of Economic
Projections (SEP) and the Dot Plot to see if the central bank still sees the
need for another rate hike or it has reached its terminal rate already. As a
reminder, in the June
Dot Plot the Fed increased its terminal rate
projections by 50 bps to 5.6% from the previous 5.1% in March. The market
currently sees a 50/50 chance for another rate hike at the November meeting
given the strength in the economic data recently with rate cuts being priced
for Q3 2024.

Thursday

The SNB is expected to hold rates steady
at 1.75% given the weak economic data and both the headline and core inflation
measures being in the SNB’s 0-2% target band.

The BoE is expected to hike by 25 bps
bringing the bank rate to 5.50% with Dhingra being the usual dissenter. Recent
communication seems to be leaning more towards keeping interest rates high long
enough to let the tightening in the pipeline to come through. Nonetheless, the
central bank should keep all the options on the table given its inflation and
wage growth rates.

The US Jobless Claims beat expectations
once again the last
week as the labour market continues to
soften although it remains fairly tight. This week the consensus sees Initial
Claims at 225K vs. 220K prior and Continuing Claims at 1695K vs. 1688K prior.

Friday

The BoJ is expected to keep everything
unchanged with rates at -0.10% and YCC to target 10yr JGBs at 0% with a soft
cap at -/+0.50% and a hard cap at 1.00%. The yield on the 10yr recently spiked
to 0.70% following BoJ
Governor Ueda comments about a “quiet exit”
from NIRP if the data supports such a move. The BoJ, of course, intervened by
buying unlimited amount of JGBs last week as they already repeated many times
that they will do so if the pace of the moves is too fast. Moreover, the wage
growth data continues to point to a slowdown, and this is something that the
BoJ watches very carefully.

The Flash PMIs are usually big market
movers as they are the most important leading indicators we have. The market
should focus on the Eurozone and the US PMIs, with the latter likely to have a
bigger impact on global markets depending on the outcome. The US Manufacturing
PMI is expected to match the prior reading at 47.9, while the Services PMI is
seen lower at 50.3 vs. 50.5 prior.

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

• General Motors says it expects to run out of parts at Kansas plant as soon as next week
• Broader US indices tumble and close lower on the week
• S&P and NASDAQ close lower on the week after sharp declines today
• WTI crude futures settle at $90.77. What are the technicals telling traders?
• The electric car race is shaping up to be one of the all-time economic battles
• Baker Hughes US oil rig count 515 vs 513 prior
• Challenger: US labor market is starting to cool and employer’s are hiring at a slower clip
• European equity close: UK stocks wrap up a stellar week with gains
• Following the Fed is a good clue on when to buy bonds
• RBC: Navigating the CHF landscape amid SNB’s upcoming neeting and USD/CHF dynamics
• US Sept prelim UMich consumer sentiment 67.7 vs 69.1 expected
• US stocks decline at the open as we head into a super-soft seasonal period
• US August industrial production +0.4% vs +0.1% expected
• US August import prices +0.5% vs +0.3% m/m expected
• US Empire Fed manufacturing index for September 1.90 versus -10.00 estimate
• Canada July manufacturing sales +1.6% vs +0.7% expected
• The AUD is the strongest and the JPY is the weakest as the NA session begins
• ForexLive European FX news wrap: Dollar mixed, yields hold higher still
• ECB’s Lagarde: We have not discussed rate cuts
• ECB’s Kazaks: Latest monetary policy move was not a ‚dovish hike‘
• ECB’s Lagarde: We will set rates at restrictive level for as long as needed

The EUR is ending the day as the strongest of the major currencies. The USD is also mostly higher with gains vs all the major currencies with the exception of the EUR. The JPY and the NZD were the weakest of the majors.

The gains in the EUR come a day after the ECB raised rates by 25 basis points (10th consecutive hike in rates). Next week, the Fed will meet on Wednesday. The expectations are for no change in policy.

The SNB and BOE on Thursday, will also meet with each expecting to raise rates by 25 basis points. The BOJ will meet on Friday. Traders will be eyeing to see if they are ready to tighten conditions.

It will be a big week for central banks next week.

Today’s move higher in the US dollar was helped by higher rates. Data in the US was mixed today with the:

• NY Fed Manufacturing stronger: The actual index is at 1.90, which is a significant improvement from the prior period’s -19.00, though it was expected to be -10.00.

• Import and Export Prices MM higher: The monthly import prices increased by 0.5%, surpassing the forecasted 0.3% and the previous month’s 0.4%. Export prices for the month rose by 1.3%, which is higher than the expected 0.4% and the previous 0.7%.

• Industrial Production MM stronger: Industrial production increased by 0.4% monthly, which is higher than the expected 0.1% and the prior 1.0%.

• Capacity Utilization SA stronger: The capacity utilization rate is 79.7%, slightly above the forecasted 79.3% and matching the prior period’s rate.

• U Mich Sentiment Prelim weaker: The preliminary sentiment index from the University of Michigan is 67.7, lower than the expected 69.1 and the prior 71.2.

• U Mich Conditions Prelim weaker: The conditions index stands at 69.8, compared to the expected 75.3 and the prior 77.4.

• U Mich Expectations Prelim modestly stronger: The expectations index is at 66.3, slightly above the forecasted 66.0 and below the prior 67.3.

• UMich 1Yr Inf Prelim lower: The 1-year inflation expectation came in at 3.1%, down from the prior 3.3%. while the 5 Yr inflation came in lower too at 2.7% vs 2.9% last month

In the US debt market, the weaker was ignored with yields moving higher across the yield curve:

• 2 year 5.0347%, up 2.1 basis points
• 5 year 4.4615%, up 4.3 basis points
• 10 year 4.334%, up 4.4 basis points
• 30 year 4.419%, up 3.4 basis points

For the trading week, yields were also higher, helping to push the DXY index higher on the week (although it was mixed vs the major currencies),

• 2 year rose 4.2 basis points
• 5 year rose 5.8 basis points
• 10 year rose 6.8 basis points and closed at the highest level since November 2007
• 30 year up 8.4 basis points and closed at the highest since April 2011.

In the forex this week, the DXY is closing the week at 105.33, up by a modest 0.26%. Nevertheless, the rise took the price to the highest level since the November 21, 2022 trading week.

Looking at the major currency pairs, the currencies were mixed. The USD was higher vs the:

• EUR, +0.36%
• GBP, +0.66%
• JPY, +0.036%
• CHF, +0.53%

The greenback lost ground this week vs the commodity currencies with declines vs the:

• CAD, down -0.86%
• AUD, down -0.83%
• NZD, down -0.23%

US stocks closes sharply lower with the broader indices leading the way. The Nasdaq was the weakest with a decline of 1.56%, while the S&P fell -1.22%. The Dow industrial average fared relatively better with a decline of -0.83% but only 3 of the 30 Dow stocks advanced.

For the trading week, the declines today, shifted the fortunes of the Nasdaq and the S&P into the red. The Nasdaq fell -0.39% while the S&P fell -0.16%. The Dow eked out a small 0.12% gain on the week.

European indices closed the day and week higher:

• German Dax rose 0.56% today and 0.97% for the week
• France’s Cac rose 0.96% today and 1.91% for the week
• UK’s FTSE 100 rose 0.50% and surged 3.12% this week
• Spain’s Ibex rose 0.01% today and rose 1.98% this week.

IN other markets:

• Crude oil did turn into negative territory intraday but is trading up $0.61 or 0.68% at $90.77. For the week, crude oil closed higher for the 3rd consecutive week adding 3.73% today
• Gold moved higher by $13.93 today and was up 0.29% on the week
• Silver rose 1.8% today and rose 0.50% on the week.

IN the digital currency Bitcoin, the price is trading at $26482 currently after trading quietly between $26228 to $26683.

Hoping you all have a good weekend. Thank you for your support. Next week will be dominated by the Fed, BOE SNB and Bank of Japan from Wednesday to Friday.

This article was written by Greg Michalowski at www.forexlive.com.

General Motors is out saying that it expects to run out of parts at Kansas plant as soon as next week. This is because of the Missouri plant strike.

The ship shortage from Covid, led to a shortage of autos for a few years and also to higher prices for used and new cars. The auto strike now threatened supply once again if it continues. Also of concern is that prices which are already up sharply, will continue the upward trajectory leading to higher inflation down the road.

The Federal Reserve will announce her interest rate decision on Wednesday at 2 PM ET. CPI inflation year on year rose to 3.7% from 3.2%, and sits well above the 2% target. The month-to-month increased by 0.6%.

This article was written by Greg Michalowski at www.forexlive.com.

The broader major indices closed sharply lower today led by the NASDAQ index which fell -1.56%. The S&P index fell -1.22%. The declines push the indices into the red for the trading week. The Dow industrial average fell -0.83%.

For the trading week,

• Dow industrial average closed up 0.12%
• S&P index fell -0.16%
• NASDAQ index fell -0.39%

The declines today were led by Adobe which tumbled -4.23% after the AI high flyer beat on earnings, but forward guidance disappointed. Nvidia – another AI stock – tumbled -3.69%, and Microsoft fell -2.52%. Other chip stocks including AMD (-4.82%), Intel (-2.04%), Taiwan Semiconductor Manufacturing company (-2.43%), and Broadcom (-2.29%) fell sharply.

Meta (-3.70%), Amazon, -2.98%, Home Depot (-2.50%) and McDonald’s (-2.31%) were big losers on the day.

Disney (+1.3%), American Express (+1.25%), and UnitedHealth (+0.63%) were the only Dow 30 stocks that gained today.

Auto workers went on strike today, and despite the strike, shares performed better than the market with GM and Stallantis shares up on the day. Ford fell modestly

• GM shares rose 0.83%
• Ford shares fell -0.04%
• Stallantis shares rose 2.12%

This article was written by Greg Michalowski at www.forexlive.com.

S&P is out with it expectations for the UAW strike and implications. They say

• Warns that if the UAW strike continues for over a week and expands, it could lead to significant reductions in earnings and liquidity in the US auto sector for 2023.
• Predicts a slowdown in U.S. auto sector momentum in the second half of 2023 and expects volumes to remain flat in 2024.
• Anticipates that a quick resolution to the UAW strike is unlikely.
• Expects automaker ratings to remain stable, accounting for industry volatility in their financial risk assessments.
• Believes the Detroit 3 automakers have a modest inventory cushion compared to the industry average.
• Believes that as of September 1, both GM and Ford had sufficient vehicle inventories to prevent any significant permanent earnings or market share loss.
• Notes that GM seems to be about two weeks short on SUV segment inventories compared to the industry average.
• As of September 1, believes Stellantis might have proactively overstocked some high-volume models.
• Suggests the UAW strike might temporarily boost new vehicle gross profits for dealers, but GPU is expected to decline to more normalized levels in the coming year.
• Warns that if the UAW strike lasts beyond 8 weeks, dealers might begin to run out of parts, impacting them negatively.
• States that a UAW strike will not significantly impact the majority of auto suppliers from a ratings perspective.

This article was written by Greg Michalowski at www.forexlive.com.

The price of WTI crude futures are settling at $90.77. That’s up $0.61 or 0.66%. The low for the day reach $89.22. The high extend up to $91.15.

For the week, the prices up around 4% on the week. This is the 3rd consecutive up week for crude oil.

Technically, the price is closing above its 100 week moving average at $85.91.

Looking at the hourly chart below, the price low today found early buyers against the 100 hour moving average (blue line in the chart below), and quickly reversed back toward the high for the day.

This article was written by Greg Michalowski at www.forexlive.com.