- It has been a quiet start to the week, with thin liquidity due to yesterday’s Labor Day holiday in the US, which kept the dollar index little changed on the day. The single currency moved a touch higher before losing traction as German consumer expectations fell to 96.9 in September from 97.7 in August. EURUSD ran into offers around 1.1080 slipping to consolidate around 1.1050 as markets await key US data later this week.
- This afternoon’s ISM Manufacturing PMI data will be closely monitored ahead of the labor market reports later this week for clues on the outlook for the US economy. Markets remain hopeful of a ‘goldilocks scenario’ as the world’s largest economy appears to be heading for a soft landing as traders pare bets on rate cuts from the Fed. Markets are looking for a small increase on last month’s manufacturing report however expectations of a 47.7 release against last month’s 46.8 would keep the print below the 50 mark which separates expansion from contraction. The Fed remain on course to cut their key interest rate at the September policy meeting with a likely move of 25bp, but this week’s employment data may signal the need for a larger move.
- GBPUSD continues to consolidate after trading through 1.32 at the end of August. The lack of UK data this week means that cable will likely be influenced by event across the pond. The pair continues to trade well and remains one of the best performing currencies in G10 this year.
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