Global assets were once again all over the place on Thursday as individual catalysts pushed them around.
In the U.S., mixed labor market updates led to a choppy trading environment and eventually weaknesses for the U.S. dollar.
How did your favorite assets trade yesterday? We have the deets!
Headlines:
- Japan average cash earnings fell from 4.5% to 3.9% y/y vs. 3.6% forecast; Real wages rose for a second straight month with a 0.4% gain
- In a speech, RBA Gov. Bullock believes it’s “premature to be thinking about rate cuts,” adding that the Board doesn’t expect to be “in a position to cut rates in the near term.“
- Switzerland unemployment rate steadied at 2.5% as expected in August
- Germany factory orders slowed down from an upwardly revised 4.6% m/m in June to 2.9% m/m in July
- S&P Global U.K. construction PMI dropped from 55.3 to 53.6 (54.6 expected) in August; “Staffing levels were broadly unchanged,” “Employment numbers stagnated”
- Euro Area retail sales rose by 0.1% m/m as expected in July, June’s downtick revised lower from -0.3% to -0.4%
- Mixed U.S. labor market reports sent the U.S. dollar all over the charts
- Challenger, Gray, & Christmas: Layoffs in U.S.-based companies showed the highest August total since 2009 while year-to-date hiring dropped to a new record low
- U.S. ADP non-farm employment change for August: 99K (144K expected, 111K previous); July’s additions revised lower from 122K
- U.S. initial jobless claimants slipped from 232K to 227K (231K expected) in the week ending August 31
- U.S. non-farm productivity revised higher from 2.3% q/q to 2.5% q/q (2.4% expected) in Q2 2024; Unit labor costs eased from 0.9% q/q to 0.4% q/q (0.8% expected)
- S&P Global final U.S. services PMI for August: 55.7 (55.0 expected, 55.2 previous); “Selling price inflation eased to a seven-month low;” “Employment decreased for the first time in three months”
- ISM services PMI picked for August: 51.5 (51.3 expected, 51.4 previous); Employment Index fell from 51.1 to 50.2; Prices Index rose from 57.0 to 57.3
- Reuters cited three sources who confirmed that OPEC+ agreed to delay planned oil output increases for October and November
- EIA crude oil inventory reflected a 6.9M-barrel draw in the week ending August 30, more than the 0.6M draw expected and the 0.8M decrease from the previous week
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets danced to their own tunes again on Thursday, with traders reacting to specific reports and staying cautious ahead of key U.S. labor data.
Asian markets carried over trends from the U.S., dragging Bitcoin, oil, and stock futures lower, while bonds and gold held steady. Europe added some volatility with mixed economic data.
Volatility was more chaotic during the U.S. session when mixed U.S. labor market updates encouraged a choppy trading environment. U.S. 10-year yields hit new 2024 lows as bond traders shifted from pricing in disinflation to flight to safety while gold revisited its all-time highs near $2,525.
U.S. stock indices ended the day mixed with the S&P 500 and the Dow closing lower while the Nasdaq capped the day in the green. Bitcoin retested its weekly lows below $56,000 while WTI crude oil, pushed around by OPEC and EIA updates, closed below $69.50.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar slipped again as traders digested mixed labor market signals, while others waited for Friday’s big NFP report.
The day started mixed for the Greenback, with USD/JPY, AUD/USD, and NZD/USD bouncing around on Japan’s real wage boost and hawkish comments from Reserve Bank of Australia (RBA) Gov. Bullock.
The dollar took a bigger hit in European trading as caution grew ahead of U.S. data. With weak ADP numbers and high layoffs, the dollar dipped lower, even though jobless claims and services PMI offered some relief.
The dollar saw a fresh wave lower near the end of the European session, possibly as traders took profits or stayed on the sidelines for Friday’s top-tier updates.
Upcoming Potential Catalysts on the Economic Calendar:
- Germany industrial production at 6:00 am GMT
- Germany trade balance at 6:00 am GMT
- U.K. Halifax house price index at 6:00 am GMT
- France industrial production at 6:45 am GMT
- France trade balance at 6:45 am GMT
- Switzerland SECO consumer climate at 7:00 am GMT
- Italy retail sales at 8:00 am GMT
- Euro Area revised GDP at 9:00 am GMT
- Euro Area final quarterly employment change at 9:00 am GMT
- U.S. NFP reports at 12:30 pm GMT
- Canada labor market numbers at 12:30 pm GMT
- Canada IVEY PMI at 2:00 pm GMT
Traders are in for a BUSY NFP day! Germany could start the party with a manufacturing update, followed by the Euro Area’s final GDP and employment numbers.
In the U.S., traders will keep close tabs on the August labor market numbers for clues on how aggressive the Fed may be when it potentially cuts its interest rates later this month.
Canada may also cause increased volatility for CAD pairs with the release of the economy’s labor market data and IVEY PMI report.
Good luck and good trading on the last trading day of the first September week!
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