US and Canadian traders were enjoying the Labor Day holiday on Monday, but that didn’t stop global markets from making big moves!
Crude oil saw a wave of volatility, falling sharply over the weekend, but eventually rallied to close in the green.
Check out the headlines that drove the rest of the major asset classes higher:
Headlines:
- Chinese official Manufacturing PMI The non-manufacturing PMI fell further to 49.1 in August from 49.4 while the non-manufacturing PMI rose slightly to 50.3 from 50.2 in July.
- OPEC+ confirms plans to increase production 180,000 barrels per day as of October despite the loss of Libyan production
- Australia Melbourne Institute Inflation Index It fell by 0.1% on a monthly basis in August after rising by 0.4% on a monthly basis in July.
- ANZ-Indeed Australian Job Ads It fell another 2.1% on a monthly basis after a 2.7% decline in July.
- Australia The company’s operating profit fell 5.3% quarter-on-quarter in the second quarter, versus an expected gain of 0.6% and a previous decline of 2.5%.
- Building approvals in Australia rose 10.4% m/m in July (vs. 2.4% expected, -6.4% previously)
- Commodity prices in Australia fell 5.2% year-on-year in August, the previous reading was revised down from -3.0% to -4.2%.
- China Caixin Manufacturing PMI The August PMI showed a surprise rise to expansion territory, coming in at 50.4 from 49.8 in July.
- Swiss retail sales Consumer prices jumped 2.7% year-on-year in July versus an expected 0.2% decline, and the previous reading was revised down to -2.6% from -2.2%.
- Swiss Manufacturing PMI It rose from 43.5 to 49.0 in August, versus an expected 43.7.
- Spain’s manufacturing PMI fell to 50.5 from 51.0 in August, versus 51.4 expected.
- US and Canadian markets closed for Labor Day holiday
- Libya’s Sarir, Messala and Nafoura oil fields have been instructed to resume operations. After the political confrontation
- U.S. oil consumption in June slowed to its lowest seasonal level since the 2020 pandemic, data from the U.S. Energy Information Administration showed.
- New Zealand’s foreign trade index slowed in the second quarter of 2024 to 2.1% from 5.1% previously, and is expected to reach 2.6% on a quarterly basis.
- The UK BRC Retail Sales Index rose from 0.3% to 0.8% year-on-year in August.
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
Crude oil bears reacted quickly to the weekend news that OPEC+ would confirm it would increase production in October, sending the energy commodity sharply lower as markets opened. It didn’t help that China’s official manufacturing PMI numbers, also released over the weekend, were not impressive.
Bitcoin also had a rough start, falling to the $57,500 area early on before gradually recovering to its opening price of around $59,000 throughout the day.
Meanwhile, gold prices fell after the release of China’s Caixin manufacturing PMI, which came in better than expected and reflected an expansion in the industry. The precious metal spent most of the day trading below its record highs while crude oil managed to bottom out and rise as London traders arrived at their desks.
However, oil prices fell again after news that Libyan oil fields were directed to resume production and the US Energy Information Administration reported that oil consumption in June fell to its lowest seasonal levels since 2020.
US and Canadian markets were closed for the Labor Day holiday, resulting in slight volatility in stocks and dollar pairs during New York market hours.
Forex Market Behavior: US Dollar vs Major Currencies:
US Dollar Overlay Against Major Currencies Chart by TradingView
The USD/JPY pair got off to a strong start as the pair appeared to still be enjoying the aftermath of Friday’s rise in core personal consumption prices. However, the pair retreated for most of the Asian session before eventually rallying during London trading hours.
Most major pairs were broadly sideways early on, with the exception of NZD/USD and AUD/USD, which appeared to be affected by disappointing official PMI readings from China and net negative economic updates from Australia.
The USD/CHF pair fell slightly after the release of positive Swiss retail sales and manufacturing PMI data, but the dollar’s strength took over. The greenback held onto gains against the yen, won and kiwi until the end of the day, while it gave up gains against the pound, euro and Australian dollar.
Potential catalysts coming up on the economic calendar:
- Swiss Consumer Price Index 6:30 AM GMT
- Swiss GDP at 7:00 am GMT
- US ISM Manufacturing PMI 2:00 PM GMT
- New Zealand World Dairy Auction Coming
- ECB President and Bundesbank President Nagel testify at 4:45 pm GMT
Today we have a couple of potential market movers, starting with the Swiss CPI reading which could have a strong impact on the SNB’s policy outlook.
After that, all eyes and ears will likely be on Uncle Sam. ISM Manufacturing PMI for August As traders look for clues ahead of the highly anticipated US non-farm payrolls data this week.
If you are trading several major currency pairs at the same time, be aware of the correlations between currencies to avoid accidentally exposing your trading account to greater risk than expected.