The return of U.S. and Canadian traders fresh from their Labor Day holiday brought an influx of volatility in the financial markets.
How did the major asset classes fare?
Check out the latest economic updates and market headlines that pushed prices around:
Headlines:
- Australia current account deficit widened from 6.3 billion AUD to 10.7 billion AUD (consensus of 4.5 billion AUD shortfall)
- Swiss CPI was flat in August vs. estimated 0.1% m/m uptick, previous 0.2% decline
- Swiss economy expanded 0.7% q/q in Q2 2024 vs. expected 0.5% growth figure, previous 0.5% reading
- Canadian manufacturing PMI in August rose from 47.8 to 49.5 to reflect stronger industry growth
- U.S. ISM manufacturing PMI in August: 47.2 (47.5 consensus, 46.8 previous), prices component rose from 52.9 to 54.0
- U.S. construction spending sank 0.3% m/m in August vs. estimated 0.1% uptick, previous flat reading
- U.S. RCM/TIPP Economic Optimism index improved from 44.5 to 46.1 in August (46.2 consensus)
- New Zealand GDT auction yielded 0.4% dip in dairy prices after earlier 5.5% gain
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets started the day on a relatively chill note, although crude oil managed to spend some time in the green while Treasury yields cruised somewhat lower.
The energy commodity resumed its selloff around the start of the London session, as investors continued to worry about weak demand from China plus a pickup in OPEC+ output. Another wave lower ensued as the U.S. markets opened with a risk-off mood, dragging equities and bitcoin sharply down as well.
U.S. bond yields paused from their slump upon seeing a slightly better than expected August ISM manufacturing PMI report, as traders likely focused on the upticks in the prices and employment components. After all, market participants are eager to price in expectations for Friday’s NFP release.
Still, equity indices continued to slide, as the S&P 500 index fell more than 2% while the Nasdaq took a 3.1% hit due to another tech sector selloff. Nvidia shares plunged 9.5% while stocks of other chipmaker companies like Broadcomm and Micron followed suit.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Forex market volatility came in play early in the Asian trading session, as Australia’s weaker than expected current account balance put the Aussie and Kiwi on the backfoot while risk-off vibes returned.
USD/JPY carried on with its decline, taking a brief pause from its slide during the London session then resuming its slump ahead of the U.S. ISM manufacturing PMI release. The report managed to cap the pair’s losses for the day, though, as the slightly better than expected figure eased U.S. recession worries.
USD/CHF also turned lower on risk aversion, although the pair moved slightly higher when the Swiss CPI fell short of estimates with a flat reading instead of the estimated 0.1% uptick. The rest of the major currencies proved no match to dollar strength, as the U.S. currency also took advantage of safe-haven flows.
Upcoming Potential Catalysts on the Economic Calendar:
- Australian GDP at 1:30 am GMT
- Chinese Caixin services PMI at 1:45 pm GMT
- Eurozone PPI at 9:00 am GMT
- BOC monetary policy statement at 1:45 pm GMT
- U.S. JOLTS job openings at 2:00 pm GMT
- BOC press conference at 2:30 pm GMT
- U.S. Beige Book at 6:00 pm GMT
All eyes and ears could be on the Loonie today, as the Bank of Canada will be announcing its monetary policy decision and possibly making another 0.25% reduction in borrowing costs. Check out our Event Guide for the September BOC Decision to see what else is expected for this top-tier catalyst.
Another potential market mover to watch out for is the U.S. JOLTS job openings report, which is seen as a leading indicator for the highly-anticipated NFP report due Friday.
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