Market activity is low this week due to holidays in the US and Canada and anticipation of the US Nonfarm Payrolls (NFP) data for August, which will be released on Friday. Besides the NFP, traders will also focus on the final August PMIs and the US ISM Services PMI and Factory Orders. These events are crucial and keep traders alert. The US Dollar recently recovered some losses from earlier in the month due to the lack of softer US inflation data and month-end flows, leading to shifts in other major currencies and commodities.
The US Dollar Index (DXY) ended a four-week decline because the US Core PCE Price Index, the Fed’s preferred inflation gauge, stayed steady in August. This reduced expectations of major rate cuts by the Federal Reserve. While a rate cut is expected in September, future moves by the Fed are uncertain, keeping traders cautious. The Dollar’s rebound is also supported by month-end positioning and mixed news. However, the upcoming US holiday, Thursday’s ISM Services PMI, and Friday’s jobs report might lead to further losses for the Dollar.
The EURUSD pair fell from its yearly high due to the US Dollar’s bounce back. Traders are unsure about the Eurozone’s economic outlook, with mixed signals from the European Central Bank (ECB). ECB official Francois Villeroy de Galhau suggested that the ECB should be cautious of low growth and consider rate cuts in September.
Commodity prices are under pressure due to concerns about global economic growth and challenges to a dovish Fed stance. Despite this, geopolitical issues and a weaker USD keep Gold buyers hopeful. Crude Oil prices are falling due to worries that OPEC+ might soon reduce production cuts.
The EURUSD's lack of clear direction is mirrored in other major currencies. GBPUSD faces challenges as UK growth concerns persist, while USDJPY recovers on speculation that the Bank of Japan may not raise rates much. AUDUSD is holding steady, but NZDUSD lacks momentum. USDCAD remains uncertain due to softer Crude Oil prices and upcoming Canadian economic data.
BTCUSD and ETHUSD have fallen recently, influenced by fears about Donald Trump’s potential US Presidential victory and concerns about tighter US SEC regulations. Historically, September has been a tough month for Bitcoin and Ethereum traders.
Looking ahead, Monday’s holidays in the US and Canada will slow market activity, but the final August PMIs from the UK, Eurozone, and Germany might create some movement before Thursday. On Tuesday, the US ISM Manufacturing PMI and Swiss CPI will be released, followed by Australia’s GDP, the Bank of Canada’s (BoC) interest rate announcement, and US ADP Employment Change on Wednesday. The JOLTS Jobs report and ISM Services PMI will also be important for traders.
With uncertainty about global economic growth and central bank actions, disappointing data could reverse the recent US Dollar recovery. However, strong data could boost the Dollar and pressure other major currencies, Antipodeans, and commodities. USDCAD might see significant changes due to weaker Crude Oil prices and a potential BoC rate cut.
May the trading luck be with you!
