Headlines:

• Weekly update on interest rates expectations
• A growing rift at the ECB on the economic outlook?
• SNB total sight deposits w.e. 30 August CHF 456.7 bn vs CHF 463.6 bn prior
• Italy Q2 final GDP 0.2% vs 0.2% Q/Q expected
• Eurozone August final manufacturing PMI 45.8 vs 45.6 prelim
• Switzerland August manufacturing PMI 49.0 vs 43.5 expected
• UK August final manufacturing PMI 52.5 vs. 52.5 prelim

Markets:

• EUR leads, JPY lags on the day
• European equities slightly lower
• 10-year German bund yields up 3 bps to 2.33%
• Gold down 0.2% to $2,498.63
• WTI crude up 0.3% to $73.75
• Bitcoin up 2.3% to $58,630

It’s a quiet start to the new week with the dollar keeping more mixed in general, as the yen lags on the day. It is a holiday for North American markets, so that isn’t giving traders much to work with amid the longer weekend.

The yen is down as bond yields are a little higher, with USD/JPY moving up from around 146.10 earlier to near 146.90 currently.

The greenback isn’t seeing broad based gains though. EUR/USD is up 0.1% to 1.1063 while USD/CHF is up 0.1% to 0.8510, and AUD/USD up 0.1% to 0.6773. It’s a mixed picture with the kiwi lagging slightly as well across the board, with NZD/USD down 0.4% to 0.6225.

European indices are also showing light changes while gold is down slightly under $2,500 as the tug of war there continues.

In terms of market flows, it’s not one to attribute anything towards to start the week.

All eyes are on key labour market data from the US later in the week. So, the early stages here are more just traders settling back into things after month-end last week.

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

Fundamental
Overview

Gold continues to trade in
a tight range as the market awaits the key catalysts this week. As a reminder,
the Fed is now very focused on the labour market as Fed Chair Powell said that
they will not welcome any more weakness and will do everything they can to keep
it strong.

Therefore, the NFP report
on Friday will decide whether the central bank will go with a standard 25 bps
cut in September or take a more aggressive approach with a 50 bps cut. Before
that, we will get other important releases like the ISM Manufacturing PMI tomorrow
which last month triggered the “growth scare”.

In the bigger picture, gold
should remain supported as real yields fall due to the Fed’s rate cut cycle,
but in the short-term, strong US data might weighed on the market a bit.

Gold
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that gold got stuck in a tight range as the lack of catalysts kept the
market at bay. Nonetheless, the buyers remain in control for now and they will
keep targeting new all-time highs. The sellers, on the other hand, will want to
see the price falling back below the 2480 level to turn the bias more bearish
and position for a drop into the 2430 level next.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the range between the 2480 support
and the 2530 resistance. The market participants will likely keep on “playing
the range” by buying at support and selling at resistance until we get a
breakout on either side.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see the choppy price action of the last two weeks. There’s not much to do here
other than waiting for a breakout. The red lines define the average daily range for today and given the lack of
catalysts and the US holiday we shouldn’t expect any breakout today.

Upcoming
Catalysts

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

See the video below

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

The dollar battled in month-end trading last week and that kept a lid on AUD/USD, with sellers also holding at the July high around the figure level. The key level there will remain a focus this week, especially with the dollar side of the equation set to come under heavy scrutiny.

It’s all about jobs-related data in the US for broader markets to start September trading. And not only will that that heavily influence dollar sentiment, but also risk sentiment this week.

There’s not much in it today with the greenback trading more mixed. USD/JPY is up 0.4% to 146.70 but AUD/USD is up 0.3% to 0.6781 currently. The latter is still trading within a 30 pips range, so I wouldn’t be calling for a serious test of 0.6800 just yet.

Buyers will need some form of trigger to really get going, especially after being checked back last week.

As things stand, the key driver of the move higher in AUD/USD is still a case of a divergence between the RBA and Fed.

Last week, we got more stubborn inflation data from Australia here. However, that wasn’t quite enough to seal a breakout for buyers. It may be month-end or it may be sellers leaning on a key technical level and holding. But the fact is price action is still not signaling a break just yet.

And that brings us to this week now. The focus turns towards labour market data from the US. Traders are pricing in ~29% odds of a 50 bps rate cut later this month by the Fed. And for the remaining three meetings this year, there’s ~98 bps of rate cuts priced in.

Are we going to see more shaky data that will compel traders to try and force the Fed’s hand? Or is it all a hiccup and we’re going to have to run that back a little in the weeks ahead?

That will be key in determining what comes next for AUD/USD as well. It’s been a nice ride up since the double-bottom in early August. Now, we’re at a critical juncture and I wouldn’t be taking any bets until we get more clarity from US data at this stage.

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

Multi-asset Forex and CFD broker, FP Markets,
further cemented its position as one of the industry’s global leaders, claiming
two prestigious awards at the Finance Magnates Pacific Summit (fmps:24). The
company won ‘Best Forex
Spreads APAC’ and ‘Best Trading Experience APAC’ at the closing event of the
two-day summit which was held on Thursday 29 August, in Sydney, Australia.
Although FP Markets has been credited with several global and regional Finance
Magnates awards and mentions in the past, these are the first to be claimed
regarding its service offering in the Asia Pacific region.

The fmps:24 awards have become some of the most sought after accolades
given their reputation and role in shaping the future of the fintech industry.
As the financial services sector continues to evolve in the Asia Pacific
region, many new clients view such awards as a seal of approval when it comes
to choosing a broker to partner with.

FP Markets has been providing exceptional trading experiences for nearly
two decades, with the company constantly innovating to improve its asset
offering and provide cost-effective trading solutions for retail investors. The
company’s competitive spreads and minimal costs make it especially popular with
short-term scalpers and day traders, and is also reflected in the numerous past
awards it has received for its superior trading conditions.

Thomas Roberts, General Manager of APAC, FP Markets, expressed his
gratitude and commented: ‘These two awards are a major milestone in our
company’s global journey, especially as we approach our 20th anniversary next
year. To win, and to do it on our home
ground, the place where it all started, shows how far we’ve come these past two
decades. Also, to be recognised for delivering what our mission as a company
encapsulates – giving traders the best possible trading experience and superior
trading conditions – demonstrates our unwavering commitment to our clients,
existing and new, wherever they are located in the world’.

About
FP Markets:

●
FP Markets is a Multi-Regulated Forex
and CFD Broker with over 19 years of industry experience.

●
The company offers highly competitive
interbank Forex spreads starting from 0.0 pips.

●
Traders can choose from leading
powerful online trading platforms,
including FP Markets’ Mobile App, MetaTrader 4, MetaTrader 5, WebTrader, cTrader, Iress and TradingView.

●
The company’s outstanding 24/7
multilingual customer service has been recognised by Investment Trends and
awarded ‘The Highest Overall Client Satisfaction Award’ over five consecutive
years.

●
FP Markets was awarded ‘Best Global
Forex Value Broker’ for five consecutive years (2019, 2020, 2021, 2022, 2023)
at the Global Forex Awards.

●
FP Markets was awarded the ‘Best Forex
Broker – Europe’ and the ‘Best Forex Partners Programme – Asia’ at the Global
Forex Awards 2022 and 2023.

●
FP Markets was awarded ‘Best Trade
Execution’, and ‘Most Trusted Broker’ and ‘Best Trade Execution’ at the
Ultimate Fintech Awards in 2022 and 2023, respectively.

●
FP Markets was crowned ‘Best CFD
Broker – Africa’ at the 2023 FAME Awards.

●
FP Markets was awarded ‘Best Trade
Execution’ and ‘Most Transparent Broker’ at the Ultimate Fintech Awards APAC
2023.

●
FP Markets was awarded the ‘Best Price
Execution’ at the Brokersview Awards 2024, Singapore.

●
FP Markets was awarded the ‘Best
Trading Experience – Africa’ at the FAME Awards 2024.

●
FP Markets was awarded ‘Most Transparent Broker’
and ‘Best Trading Conditions’ at the
Global Ultimate Fintech Awards 2024.

●
FP Markets regulatory presence
includes the Australian Securities and Investments Commission (ASIC), the
Financial Sector Conduct Authority (FSCA) of South Africa, the Financial
Services Commission (FSC) of Mauritius, the Cyprus Securities and Exchange Commission
(CySEC), the Securities Commission of the Bahamas (SCB), and the Capital
Markets Authority (CMA) of Kenya.

For more information on FP
Markets‘ comprehensive range of products and services, visit https://www.fpmarkets.com/

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

Rate cuts by year-end

• Fed: 99 bps (69% probability of 25 bps rate cut at the upcoming meeting)
• ECB: 58 bps (98% probability of 25 bps rate cut at the upcoming meeting)
• BoE: 39 bps (78% probability of no change at the upcoming meeting)
• BoC: 75 bps (79% probability of 25 bps rate cut at the upcoming meeting)
• RBA: 19 bps (94% probability of no change at the upcoming meeting)
• RBNZ: 72 bps (79% probability of 25 bps rate cut at the upcoming meeting)
• SNB: 51 bps (70% probability of 25 bps rate cut at the upcoming meeting)

Rate hikes by year-end

• BoJ: 7 bps (97% probability of no change at the upcoming meeting)

*Where you see 25 bps probability, the rest of the probability is for a 50 bps cut.

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

UPCOMING
EVENTS:

• Monday: US/Canada Holiday, China Caixin Manufacturing
  PMI, Swiss Manufacturing PMI.
• Tuesday: Swiss CPI, Swiss Q2 GDP, Canada Manufacturing
  PMI, US ISM Manufacturing PMI.
• Wednesday: Australia Q2 GDP, China Caixin Services PMI,
  Eurozone PPI, BoC Policy Decision, US Job Openings, Fed Beige Book.
• Thursday: Japan Average Cash Earnings, Swiss Unemployment
  Rate, Eurozone Retail Sales, US ADP, US Jobless Claims, Canada Services
  PMI, US ISM Services PMI.
• Friday: Canada Labour Market report, US NFP.

Tuesday

The Switzerland
CPI Y/Y is expected at 1.2% vs. 1.3% prior, while the M/M measure is seen at
0.1% vs. -0.2% prior. The market is expecting the SNB to deliver 52 bps of
easing by year end with a 67% probability of a 25 bps cut at the September
meeting (the remaining 33% is for a 50 bps cut).

SNB’s Jordan last week didn’t sound happy about the strong
appreciation in the Swiss Franc, so we might either see a 50 bps cut in
September or some intervention from the central bank to calm things down a bit.

The US ISM
Manufacturing PMI is expected at 47.8 vs. 46.8 prior. As a reminder, the last month the ISM release was the catalyst that triggered a
huge selloff in risk assets as we got the “growth scare”.

The main
culprit might have been the employment sub-index falling to a new 4-year
low ahead of the NFP report which eventually triggered another wave of selling
as it came out weaker than expected across the board.

Later on, lots of
data in August showed that the weak data in July might have been negatively
affected by Hurricane Beryl, so that’s something that the market will look
at for confirmation.

The S&P Global Manufacturing PMI released two weeks ago wasn’t exactly comforting
though. The index saw the second consecutive contraction and the commentary
was pretty bleak.

The agency said “this
soft-landing scenario looks less convincing when you scratch beneath the
surface of the headline numbers. Growth has become increasingly dependent on
the service sector as manufacturing, which often leads the economic cycle, has
fallen into decline.”

“The manufacturing
sector’s forward-looking orders-to-inventory ratio has fallen to one of the
lowest levels since the global financial crisis. Employment fell in August,
dropping for the first time in three months”,

Wednesday

The BoC is
expected to cut rates by 25 bps bringing the policy rate to 4.25%. The recent CPI report showed some more easing in the underlying inflation
measures and the labour market data was pretty soft.

Overall, it
doesn’t look like the central bank will go for a 50 bps cut but it cannot be
completely ruled out. Including the September cut, the market expects a total
of 75 bps of easing by year end.

The US Job
Openings is expected at 8.100M vs. 8.184M prior. The last report saw a slight increase but the strong downtrend that
started in 2022 remains firmly in place. The quit, hiring and layoff rates
remain low as the labour market has been softening via less hiring rather than
more layoffs.

Thursday

The Japanese
Average Cash Earnings Y/Y is expected at 3.1% vs. 4.5% prior. As a reminder,
the economic indicators the BoJ is focused on include wages, inflation,
services prices and GDP gap.

Moreover, Governor
Ueda kept the door open for rate hikes as he said that the recent market moves
wouldn’t change their stance if the price outlook was to be achieved and added
that Japan’s short-term interest rate was still very low, so if the economy were
to be in good shape, BoJ would move rates up to levels deemed neutral to the
economy.

The US Jobless
Claims continues to be one of the most important releases to follow every week
as it’s a timelier indicator on the state of the labour market.

Initial Claims
remain inside the 200K-260K range created since 2022, while Continuing Claims
have been on a sustained rise showing that layoffs are not accelerating and
remain at low levels while hiring is more subdued.

This week Initial
Claims are expected at 230K vs. 231K prior, while Continuing Claims are seen at
1865K vs. 1868K prior.

The US ISM
Services PMI is expected at 51.1 vs. 51.4 prior. This survey hasn’t been giving
any clear signal lately as it’s just been ranging since 2022, and it’s been
pretty unreliable. The market might focus just on the employment sub-index
ahead of the US NFP report the following day.

The recent S&P Global Services PMI showed another uptick in the services sector as
growth in Q3 diverged again between Manufacturing and Services.

Friday

The Canadian
Labour Market report is expected to show 25.0K jobs added in August vs. -2.8K
in July and the Unemployment Rate to increase to 6.5% vs. 6.4% prior. It’s
unlikely that the market will care much about this report since we get the US
NFP released at the same time.

The US NFP is
expected to show 165K jobs added in August vs. 114K in July and the
Unemployment Rate to tick lower to 4.2% vs. 4.3% prior. The Average Hourly
Earnings Y/Y is expected at 3.7% vs. 3.6% prior, while the M/M figures is seen
at 0.3% vs. 0.2% prior.

The last month, the US labour market report came out weaker than
expected across the board and triggered another wave of selling in risk assets that
started with the ISM Manufacturing PMI the day earlier.

There’s been
lots of talk about the possible culprit for the weaker figures and it seems
like Hurricane Beryl affected the data.

The BLS said
Hurricane Beryl, which slammed Texas during the survey week of the July
employment report, had „no discernible effect“ on the data.

The household
survey, however, showed 436,000 people reported that they could not report to
work because of bad weather last month, the highest on record for July. There
were 249,000 people on temporary layoff last month.

In fact, the
majority of the increase in the unemployment rate has been due to people on
temporary layoff. The market will want to see if July’s data was indeed
negatively affected by temporary factors.

As a reminder, the
Fed is very focused on the labour market now and this report will decide
whether they will cut by 25 bps or 50 bps at the upcoming meeting.

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

August 2024 official Chinese PMIs from the National Bureau of Statistics (NBS):

Composite is 50.1

• prior50.2

August Manufacturing PMI 49.1

• expected 49.5, prior49.4

Services 50.3

• expected 50.0, prior 50.2

—

The Chinese economy has been showing, and continues to show, a patchy and uneven recovery. Key trouble spots include:

• an uncertain property sector outlook, the sector is mired in debt
• subdued consumer confidence and demand
• manufacturing overcapacity in some sectors
• still below target underlying inflation (impacting this are the above points on weak domestic demand and supply overcapacity)
• on the horizon are potentially higher tariffs on Chinese exports

Authorities have been lobbing targetted support at the economy, in a piecemeal fashion. There is still plenty of work to do.

—

China has two primary Purchasing Managers‘ Index (PMI) surveys – the official PMI released by the National Bureau of Statistics (NBS) and the Caixin China PMI published by the media company Caixin and research firm Markit / S&P Global.

• The official PMI survey covers large and state-owned companies, while the Caixin PMI survey covers small and medium-sized enterprises. As a result, the Caixin PMI is considered to be a more reliable indicator of the performance of China’s private sector.
• Another difference between the two surveys is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey.
• Despite these differences, the two surveys often provide similar readings on China’s manufacturing sector.
• The Caixin manufacturing PMI will follow on Monday, services on Wednesday

This article was written by Eamonn Sheridan at www.forexlive.com.

• US July core PCE +2.6% y/y vs +2.7% expected
• OPEC+ is likely to proceed with a planned gradual production increase from Oct — report
• US August UMich final consumer sentiment 67.9 vs 68.0 expected
• Canada Q2 GDP +2.1% q/q annualized vs +1.6% expected
• Dallas Fed trimmed mean PCE price index for July 1.7% versus 1.8% in June
• US weekly Baker Hughes oil rig count unchanged at 483
• US dollar specs turn short for the first time since February
• ECB’s Villeroy: It would be fair and wise to cut rates in Sept
• Goldman Sachs workers face the annual cull

Markets:

• Gold down $19 to $2501
• WTI crude oil down $2.47 to $73.44
• US 10-year yields up 4.3 bps to 3.81%
• S&P 500 up 0.6%
• USD leads, JPY lags.

It was tough to tie the fundamentals to the market moves today, as is often the case at month end. Tokyo CPI was hot earlier and US PCE was a tad cool and normally that’s the recipe for a USD/JPY decline but it was just the opposite as the pair climbed 116 pips in a steady rally that started in Europe and never eased.

That was part of broad bids in the US dollar that were supported somewhat by rising Treasury yields. However the 30 pip decline in the Australian dollar certainly went against the rip in equities.

The Canadian dollar was particularly volatile and rallied initially on a strong GDP number. However the details of that report showed no growth in June and July plus the vast majority of the growth in the quarter was driven by government spending. That led to a rethink, particularly following the drop in oil prices. All told, there were four 30-pip straight line moves in USD/CAD trading to round out a lively month. That will give North Americans plenty to digest over the long weekend.

The euro finishes the month above 1.10, which is a nice victory but a cent-and-a-half from Monday’s high of 1.1201. It declined in four of the five days this week in a setback after three weeks of strong gains.

Similarly, cable fell for the third consecutive day and showed few signs of life in month end trade.

On net, the US dollar rebound balances the market heading into what’s going to be a lively September. Have a great weekend.

Justin and Eamonn will be back next week.

This article was written by Adam Button at www.forexlive.com.

There was no lack of drama in the final day of equity trading in what was a wild ride in August. The S&P 500 opened strongly and then gave it all back to trade in negative territory at midday. However some steady bids emerged in the afternoon before a massive wave of buying late.

Much of it was likely technical into a month-end long weekend but it wraps a bow on a lively one.

• S&P 500 1.0%
• Nasdaq Comp +1.1%
• DJIA +0.6%
• Russell 2000 +0.3%
• Toronto TSX Comp +0.2%

On the week:

• S&P 500 +0.25%
• Nasdaq Comp -0.9%
• Russell 2000 -0.4%
• Toronto TSX Comp -0.1%

On the month:

• S&P 500 +2.3%
• Nasdaq Comp +0.6%
• DJIA +1.8%
• Russell 2000 -2.0%
• Toronto TSX Comp +0.6%

Those monthly numbers aren’t impressive at first blush but they come after massive selling at the outset.

The Nasdaq Composite monthly chart now shows a double doji. That’s a setup for a big move to come. Given the impressive recovery from the August declines, I’ll take the upside but it’s tough to have confidence after the Nvidia decline and with a negative September seasonal backdrop.

This article was written by Adam Button at www.forexlive.com.

The main driver of US dollar strength over the past number of years was ‚US exceptionalism‘. That’s meant stronger growth and higher US interest rates.

The stronger growth narrative is still in place — even if it requires a deficit at 7% of GDP — but Fed Chairman Jerome Powell has deconstructed the second part of narrative. His comments suggest the Fed won’t tolerate a rise above 4.4% and that the FOMC plans to cut rates even with strong growth.

That’s prompted a re-think in the market and some broad softening of the US dollar (at least until today).

This article was written by Adam Button at www.forexlive.com.