Market Insight 05-09-2024

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  • Market Insight 05-09-2024

Summary

  • EUR/USD remains subdued below 1.1100 as cautious sentiment prevails ahead of key US labour market data. Despite continued US Dollar weakness, the pair struggles to gain momentum.
  • German Factory Orders unexpectedly rose by 2.9% in July, signalling resilience in the country’s manufacturing sector, but the Euro remains largely unmoved.
  • EUR/GBP has dropped near 0.8400 amid growing expectations of an ECB rate cut in September. The Euro is further pressured by weaker Eurozone services data, while the British Pound gains strength on rising expectations of a more hawkish Bank of England.
  • GBP/USD trades near 1.3150, maintaining modest gains supported by a weaker US Dollar, as traders await US jobs data.
  • The Australian Dollar holds steady despite stronger-than-expected trade balance data and hawkish commentary from the Reserve Bank of Australia. Weak GDP growth and contracting manufacturing activity weigh on sentiment.
  • US JOLTS job openings fell below expectations, indicating a cooling labour market. This initially pressured the US Dollar and equities, but both later stabilised as markets await more decisive employment data on Friday.

Outlook

  • US Labour Market Data: All eyes are on the upcoming US Nonfarm Payrolls report. A weak report could solidify expectations for a rate cut from the Federal Reserve, potentially pressuring the US Dollar further. Conversely, strong numbers could support the dollar and dampen risk sentiment.
  • ECB and BoE Rate Decisions: Markets are increasingly expecting the European Central Bank to cut rates in September, which could weigh further on the Euro. Meanwhile, the Bank of England is expected to maintain a more hawkish stance, supporting the British Pound.
  • Australian Dollar: While Australia’s trade surplus offers some support, the overall outlook remains cautious due to slowing GDP growth and persistent weakness in the manufacturing sector.
  • Canadian Dollar: Following the Bank of Canada’s recent rate cut, more cuts are expected, which could keep pressure on the Canadian Dollar in the medium term. Markets will closely watch economic data to gauge further action.

Global Sentiment: Uncertainty dominates markets ahead of key US jobs data, with expectations that a second consecutive weak report could further erode market confidence. Keep an eye on volatility across the board, especially in USD pairs and commodity-linked currencies.