U.S. Dollar catches a break to begin end of Q3
The U.S. Dollar is trading in favorable ranges to start September after an August that saw it lose roughly 0.8% of its overall value, according to the Bloomberg Dollar Spot Index.
After four weeks of no aggression, the armed conflict between the U.S.-Israel alliance and Iran has returned, with oil supertankers now being hit by unknown projectiles as they make their way through the Strait of Hormuz. The Buck’s role as a safe-haven asset is also making a comeback, with all peers facing downward pressure. Gold prices are headed toward a two-week low, while Brent crude oil rose above $92.00 per barrel.
Today, we will see plenty of data points, starting with the S&P Global U.S. Manufacturing Purchasing Managers’ Index at 9:45 AM, followed by the Institute for Supply Management surveys on manufacturing, prices paid, new orders, and employment at 10:00 AM. Labor conditions will also be analyzed through JOLTS job openings, quits, and layoff levels for July, due at the same hour. If the labor market comes out poorly and is perceived as unstable, the Buck may go back to experiencing losses. For now, Middle East tensions are grabbing most headlines and affecting market sentiment.
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro managed to squeeze out a gain from August flows after rising by 0.7% against the U.S. Dollar but is currently losing a bit of ground as markets wonder about the sustainability of a prolonged armed conflict. Domestically, for the Ancient Continent, it was a bit of a disappointment to see Iceland choose not to integrate further within the European Union, with the rejection serving as a possible catalyst for other member nations to question their commitment.
Globally, polls have shown a propensity for voting out incumbents, and new leadership may look to question existing agreements. Regardless, the Eurozone itself seems to be steady, with the S&P Eurozone Manufacturing PMI near its expected level, while August Consumer Price Index climbed as forecast by 0.4%, bringing the annual average to 3.3%. While we get further inflation gauges with the Producer Price Index on Thursday, next week will begin with traders looking into the final reading of Q2 gross domestic product growth.
JPY
The Japanese Yen fell by 1.8% against the U.S. Dollar throughout August, despite the currency being supported after FX intervention rounds with aid from the U.S. Treasury Department. Japan’s ten-year yield reached its highest point this century after U.S. Treasury Secretary Scott Bessent added pressure on the Bank of Japan to tighten its monetary policy as the Yen continues to dwindle. The 10-year bond yield now sits at 3.0%, the first time it has hit that level since 1996. BOJ officials will meet on September 18th, two days after the Fed, and odds of a 25-basis-point hike currently stand at 94.0%.