The USD is steady, oil prices ease, equity markets are down, and US yields ease as risk-off sentiment grows. Currency markets are sidelined as investors focus on a flurry of US jobs data this week, starting with the US JOLTS Job openings today and culminating with Friday's US Nonfarm Payrolls on Friday. Equity markets are down on a global retreat from risk assets increased on concerns about the US economy and a weakening tech sector. Today's US Jolts Jobs report is expected to show a cooling in the labor market following Tuesday's US PMI data showing a fifth consecutive month of contraction in manufacturing activity. Elsewhere, oil prices remain under pressure due to ongoing concerns about China's growth and the easing of the Libyan dispute. Bitcoin touched a one-month low as prices weakened by 2%, weakening below $57k. Today's focus is the CAD BoC Interest Rate Decision & Monetary Policy Statement. US Jolts Job Openings, Factory Orders, and the Fed's Beige Book will help provide intraday direction to markets.
In other news. The EU urged overhauling the Euro 387 billion farm subsidies regime. Erdogan's rhetoric stokes anti-Israel sentiment in Turkey. Investment banks cut China's GDP forecast as confidence wanes. A leak reveals that Russia built a covert trade channel with India. Nvidia is down 2% in premarket trading after a plunge that wiped out nearly $300 billion in market cap. Bank of Canada is seen cutting rates again as inflation worries fade. Volkswagen flags lower sales as labor unions protest potential plant closures. Upbeat PMI data for the Eurozone August showed that business activity received a lift from the Olympics. The US charges Hamas leaders over the Oct 7th attack on Israel.
In currency markets. The USD eases, the JPY edges higher, and the Chinese Yuan firms as markets await Friday's US Nonfarm payrolls report. CNY & Asian currencies are up by 0.1% on average against the USD. Trading currencies are mixed with MXN, SEK & NOK 0.25%, AUD, CHF & NZD up 0.1%, and ZAR & JPY strengthening by 0.3% against the USD.
In commodity markets, oil and gold prices eased by 0.4%, natural gas wheat prices were flat, soybean prices tumbled by 0.9%, copper prices weakened by 0.65%, and silver and soybean prices were flat.
CAD is sidelined ahead of the Bank of Canada's interest rate decision later today. The loonie has weakened by 1.8% in September as investors expect the BoC to ease interest rates by 0.25% today and for the BoC Governor to signal more interest rate cuts to come in 2024. TD & CIBC expect the BoC to cut interest rates by 175 bps by the end of 2025, bringing rates down to 2.75%. Intraday, alongside the BoC interest rate decision and Monetary Policy statement, investors will also monitor the US data releases to provide direction for the loonie today.
EURCAD continues to edge higher, up 0.5% in September and up 2.5% in 2024, as investors anticipate an increasing interest rate divergence between the ECB and the BoC.
EUR finds support at 1.1000 and edges higher amid a softer USD. Markets are finding a balance between the increasing risk-off mood and the weakening US manufacturing PMI. Domestically, France's PMI data beat expectations, with the country getting a lift from the Paris Olympics. Germany, Italy, and the Eurozone PMI missed forecasts, increasing expectations that the ECB will cut interest rates this month. Intraday, the Jolts Jobs opening for July is expected to stand at 8.1%, slightly lower than June.
EURGBP slips in early trading, holding flat for September but remaining up nearly 3% in 2024. Our bias favors a stronger GBP, with expectations that the BoE will keep its domestic rates on hold in September.
GBP is steady, holding above 1.3100 ahead of the US Jobs data. The USD remains under pressure following yesterday's soft US manufacturing data, which increased worries about a hard landing for the US, with concerns increasing heading into Friday's critical US Nonfarm payroll report. Domestically, the pound holds steady following better-than-expected UK Composite & Services PMI data. We anticipate the pound will maintain an underlying support against the USD, with investors looking for an interest rate cut from the Fed this month. Intraday, the US Jolts Job data will help provide direction to the pound.
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