With few new catalysts to drive market activity, investors are positioning themselves ahead of anticipated data releases on Wednesday and Thursday.
Here are the key headlines that impacted major assets on Tuesday.
Headlines:
- Westpac: Australian consumer sentiment fell by 0.5%, from 85.0 to 84.6 in September; attention may be shifting from the cost of living to job prospects.
- NAB: Australia’s business confidence declined from 1 to -4 in August, marking the first negative reading in three months.
- China: Trade surplus widened from $67.81 billion to $91.02 billion in August, with exports rising by 8.7% year-on-year and imports up by 0.5% year-on-year.
- Japan: Preliminary machine tool orders dropped by 3.5% year-on-year in August, following an 8.4% year-on-year increase in July.
- Germany: Final inflation rate confirmed at -0.1% for August.
- UK: Jobs data presented mixed results, indicating a cooling labor market but ongoing wage pressures.
- US: NFIB small business index decreased from 93.7 to 91.2 in August, with “historically high inflation” remaining a top concern for owners.
- BOE: Deputy Governor Sarah Breeden supports easing financial regulations to stimulate economic growth.
- BOC: Governor Macklem noted that global trade disruptions may complicate efforts to achieve the 2% inflation target.
- FOMC: Member Michael Barr announced a revised plan to increase bank capital requirements by 9%, down from the 19% increase proposed last summer.
- New Zealand: Visitor arrivals rose by 2.2% month-on-month in July, with June’s reading revised from -0.2% to 0.5%.
FX Market Behavior: U.S. Dollar vs. Major Currencies
The U.S. dollar started the day on a strong note, extending its gains from the previous U.S. session. However, Asian traders were less enthusiastic about the rally, leading to a dip in the Greenback as the market anticipated a more dovish Federal Reserve decision later this month.
Price action became more volatile as the day progressed, influenced by events such as the U.K. jobs report and Bank of Canada Governor Macklem’s press conference, which affected their respective currencies.
Overall, a risk-off sentiment prevailed, with “risk” currencies like the EUR, GBP, AUD, CAD, and NZD trading lower, while safe havens such as the CHF and JPY gained. This shift is likely due to uncertainty surrounding the upcoming U.S. CPI report and the European Central Bank's decision on Thursday.
USD/JPY continued its decline from the European session, emerging as the weakest of the major dollar pairs. Although the dollar found some support against other currencies at the start of the U.S. session, it eventually drifted lower from its intraday highs.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. monthly GDP at 6:00 am GMT
- U.K. goods trade balance at 6:00 am GMT
- U.K. 3-month services index at 6:00 am GMT
- U.K. industrial production at 6:00 am GMT
- U.K. manufacturing production at 6:00 am GMT
- U.S. CPI reports at 12:30 pm GMT
- U.K. CB leading index at 1:30 pm GMT
- EIA crude oil inventories at 2:30 pm GMT
- U.K. RICS house price index at 11:01 pm GMT
- Japan BSI manufacturing index at 11:50 pm GMT
- Japan PPI reports at 11:50 pm GMT
Attention news traders! The U.K. will release several mid-tier economic reports that could impact Sterling during the London session.
In the U.S., August inflation reports are expected to be consistent with previous readings, maintaining speculation for a 25bps Fed interest rate cut.
Ready to seize trading opportunities from these releases? Stay tuned for the latest updates!
