The return of US and Canadian traders directly from the Labor Day holiday has brought a surge of volatility to financial markets.
How did the major asset classes perform?
Find out the latest economic updates and market headlines that drove prices higher:
Headlines:
- Australia’s current account deficit The deficit widened from A$6.3 billion to A$10.7 billion (consensus deficit of A$4.5 billion).
- Swiss Consumer Price Index It was flat in August versus an expected 0.1% monthly rise and a previous 0.2% decline.
- Swiss economy grows by 0.7% q-o-q in Q2 2024 Compared to the expected growth figure of 0.5%, and the previous reading of 0.5%
- Canada’s manufacturing PMI rose in August from 47.8 to 49.5, reflecting stronger manufacturing growth
- US ISM Manufacturing PMI August: 47.2 (47.5 consensus, 46.8 previous), price component up from 52.9 to 54.0
- U.S. construction spending fell 0.3% on a monthly basis in August, versus an expected 0.1% rise and a previous flat reading.
- US RCM/TIPP Economic Optimism Index improved from 44.5 to 46.1 in August (consensus 46.2)
- New Zealand’s GDT auction led to a 0.4% drop in dairy prices after an earlier 5.5% rise.
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
Markets started the day on a relatively quiet note, although crude oil managed to spend some time in the green while Treasury yields fell somewhat.
The energy commodity resumed selling at the start of the London session as investors continued to worry about weak demand from China as well as a recovery in OPEC+ production. Another downtrend followed as US markets opened in a riskier mood, sending stocks and Bitcoin sharply lower as well.
US Treasury yields paused their declines after the Institute for Supply Management (ISM) manufacturing PMI report for August came in slightly better than expected, with traders likely focusing on the gains in employment prices and components. After all, market participants are keen to factor in their expectations for Friday’s nonfarm payrolls report.
However, stocks continued to slide, with the S&P 500 down more than 2% and the Nasdaq down 3.1% as another wave of selling in the technology sector took its toll. Shares of Nvidia fell 9.5%, while shares of other chipmakers such as Broadcom and Micron followed suit.
Forex Market Behavior: US Dollar vs Major Currencies:
US Dollar Overlay Against Major Currencies Chart by TradingView
The forex market was affected early in the Asian trading session, as a weaker than expected Australian current account balance sent the Australian and New Zealand dollars lower while risk aversion returned.
The USD/JPY pair continued its slide, briefly pausing during the London session before resuming its decline ahead of the release of the US Manufacturing PMI from the Institute for Supply Management. However, the report managed to limit the pair’s losses on the day, as the slightly better-than-expected figure eased concerns about a recession in the US.
The USD/CHF pair also turned lower on risk aversion, although the pair rose slightly when Swiss CPI came in below estimates with a flat reading instead of the expected 0.1% rise. The rest of the majors were unable to match the dollar’s strength, with the greenback also benefiting from safe-haven flows.
Potential catalysts coming up on the economic calendar:
- Australian GDP at 1:30am GMT
- China Services PMI 1:45 PM GMT
- Eurozone Producer Price Index at 9:00 am GMT
- Bank of Canada Monetary Policy Statement 1:45 PM GMT
- Job opportunities at US JOLTS 2:00 PM GMT
- Bahrain Olympic Committee Press Conference 2:30 PM GMT
- US Beige Book 6:00 PM GMT
All eyes and ears may be on the Canadian dollar today, as the Bank of Canada announces its monetary policy decision and may cut borrowing costs by another 0.25%. Read our report Event Guide to IOC Decision in September Let’s see what to expect from this top-notch catalyst.
Another potential market driver to watch out for is: USA Job Openings Report JOLTSwhich is seen as a leading indicator of the highly anticipated nonfarm payrolls report due on Friday.
Don’t forget to check out our new Forex Correlation Calculator!
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