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We saw some US dollar demand into the London fix all week and that was a preview of today’s flows, as the dollar accelerated into the final fix of the month.

USD/JPY touched a session high up 76 pips to 145.74, while the Australian dollar also fell to a session low at 0.6775. The euro and pound are slightly above the earlier lows.

It’s tough to make sense of market moves at month end as flows top fundamentals. Looking ahead, September seasonals are poor for risk trades but that doesn’t always transfer into the types of moves you would expect in FX. Instead, looks for a healthy dose of fundamentals to dominate, including non-farm payrolls next week and rate decisions from all the majors, starting with the Bank of Canada on Wednesday.

The loonie is particularly volatile today after a decent GDP report. Note that it’s a holiday in the US and Canada on Monday so the flows in USD and CAD are particularly strong today.

This article was written by Adam Button at www.forexlive.com.

• Prelim was 67.8
• Prior was 66.4
• Current conditions 61.3 vs 60.9 prelim (62.7 prior)
• Expectations 72.1 vs 72.1 prelim (68.8 prior)
• 1-year inflation 2.8% vs 2.9% prelim
• 5-year inflation 3.0% vs 3.0% prelim

Comments from survey director Joanne Hsu:

Consumer sentiment confirmed its early-month reading; after
drifting down for four months, sentiment inched up 1.5 index points
above July and is currently 36% above the all-time historic low from
June 2022. Consumers’ short- and long-run economic outlook improved,
with both figures reaching their most favorable levels since April 2024
and a particularly sizable 10% improvement for long-run expectations
that was seen across age and income groups. Sentiment this month
reflects a slight rise in sentiment among Independents, as Democrats and
Republicans offset each other almost perfectly. Democrats exhibited a
large 10% increase in sentiment while Republicans posted an equally
sized decline. These patterns resulted from a sea change in election
expectations this month with Harris emerging as the Democratic candidate
for president. In July, 51% of consumers expected Trump to win the
election versus 37% for Biden. In August, election expectations flipped;
36% expected Trump to win compared with 54% for Harris. Economic and
election expectations are both subject to change as election day
approaches.

Given the Fed’s focus on employment, here is an interesting chart showing the expected change in unemployment. It ticked up but it still within the recent range.

This article was written by Adam Button at www.forexlive.com.

There has been some talk that the planned OPEC+ barrel return would be pushed back but it’s still coming, according to a report from Reuters that cites six sources.

I’m not terribly surprised by the messaging. US oil companies set budgets in Sept/Oct and OPEC surely doesn’t want them to set out to increase production and take more market share.

This should drag down oil prices though to end what’s been a good week. The wild card here is Libyan production, which has rapidly declined to nearly nothing.

The plan calls for an increase of 180k bpd in October as part of 2.2 mbpd that are offline.

This article was written by Adam Button at www.forexlive.com.

US markets are set to open higher today
with futures seeing the S&P 500 up 0.5%, the Nasdaq-100 up 0.9%
and the Russell 2000 up 0.4%.

Here are the biggest movers pre-market from Newsquawk:

• $ADSK +5%: Rev. & EPS beat; Exec given its momentum in Q2, lifting FY billings, rev., EPS & FCF outlook
• $DELL +4%: Rev. & EPS beat; Continues to see increase in number of enterprise customers buying AI solutions
• $MRVL +11.3%: EPS & rev. beat
• $LULU +4%: EPS beat, although lowered guidance & missed sales exp.
• $ULTA -8%: Profit misses & lowered guidance w/ exec citing a decline in SSS as main driver
• $ESTC -28%: Next Q rev. guide light & lowered FY; Had a slower start to the yr. due to segmentation changes & took steps to address, but will impact rev. this yr.
• $INTC +4%: Working w/ IB to navigate its slump, exploring options like splitting its product-design & manuf. units & potentially scrapping factory projects
• $NXPI +4.5%: Approved interim dividend of $ 1.014/shr w/ additional $2bln for share purchases
• $CRWD +1.6%: Upgraded at HSBC

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Crude oil with a quick move lower on the planned OPEC+ hike in October.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The US dollar jumped in the aftermath of the PCE report, though I’m not sure that correlation equals causation. The PCE report was a touch low, highlighting the downtrend in inflation. That should have weighed on the dollar and did initially, albeit slightly.

A short time later the dollar rebounded and Treasury yields inched higher in what’s more-likely a case of month-end flows. It was a volatile month in the FX market and USD/JPY in particular. Right now is the most-liquid time of the day in FX and the move was likely an indication of strong flows ahead of the long weekend in the US, with some buy-stops run on the break of the weekly highs as well.

This article was written by Adam Button at www.forexlive.com.

• Prior was +2.6%
• PCE core +0.2% m/m vs +0.2% expected (unrounded +0.161%)
• Prior m/m +0.2%
• Headline inflation PCE +2.5% y/y vs +2.6% expected (Prior +2.5%)
• Deflator +0.2% m/m vs +0.2% expected (prior was +0.1%)
• Unrounded m/m +0.155%

Consumer spending and income for July:

• Personal income +0.3% vs +0.2% expected. Prior month +0.2%
• Personal spending +0.5% vs +0.5% expected. Prior month +0.3%
• Real personal spending +0.4% vs +0.2% prior

These numbers are a tad dovish and the US dollar edged down on a couple fronts but the moves were minimal. Overall, this report shows continued progress on inflation and is a green light for the Fed cut cut rates. The probability of 50 bps is at 30%, which is a tad lower than yesterday but will hinge on next Friday’s non-farm payrolls report.

This article was written by Adam Button at www.forexlive.com.

• Prior was +0.2%
• Services industries +0.1% vs +0.1% prior
• Goods -0.4% vs +0.4% prior
• Manufacturing -1.5% vs +1.0% prior
• July advance GDP 0.0%

Real gross domestic product was essentially unchanged in June, following a 0.1% increase in May. Goods-producing industries (-0.4%)
saw its largest decrease since December 2023 as declines in
manufacturing and construction were partially offset by increases in
utilities and agriculture. Services-producing industries (+0.1%)
increased for the third consecutive month in June 2024.
Overall, 12 of 20 sectors expanded in June.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• ECB Muller says confidence growth in Sep cut but after that is less certain
• EU commission chief says must play stronger role in defence
• AUD the strongest and CHF the weakest
• Japan’s MOF reports zero yen intervention from July 30 to Aug 28
• Eurozone flash HICP YY 2.2% vs 2.2% expected
• ECB Kazaks says open to discussing a September cut
• BoE consumer credit 1.215B vs 1.300B expected
• Spanish current account balance 5.02B vs 5.56B prior
• China regulator to guide Alibaba towards better compliance and service quality
• German Unemployment Rate 6.0% vs 6.0% expected
• ECB Rehn says falling growth and inflation makes case for a Sep rate cut
• What are money markets expecting from September’s central bank decisions
• ECB’s Schnabel urges caution and emphasizes data-driven policy
• Swiss KOF indicator 101.6 vs 100.6 expected
• French producer prices YY -5.4% vs -6.0% prior
• French GDP QQ final 0.2% vs 0.3% expected
• French prelim HICP YY 2.2% vs 2.1% expected
• What are the main events for today?
• Deepening downturn expected in China’s property market for 2024-2025
• UK nationwide house prices YY 2.4% vs 2.9% expected
• German import prices MM -0.4% vs 0.0% expected
• Japan housing starts YY -0.2% vs -0.1% expected
• Japan construction orders YY 62.8% vs -19.7% prior
• BofA looking for EUR outflows and USD inflows
• Mostly messy day for sentiment so far
• What do we have coming up for the calendar today

Markets:

• CAD leads, CHF lags on the day
• European equities higher;
  S&P 500 futures up 0.44%
• US 10-year yields flat at
  3.856%
• Gold
  down 0.05% to $2,519
• WTI
  crude up 0.29% to $76.18
• Bitcoin
  up 0.19% to $59,474

It was a quiet session with subdued moves across the markets. The newsflow was once again a bit dull as the only notable release was the Eurozone Flash CPI which came out in line with estimates.

ECB speakers continue to support a September cut, which is fully priced in anyway, but they emphasize data dependency for the next cuts. The attention will now switch to the US PCE report due in an hour but it’s unlikely to trigger big moves unless we get strong deviations from the expected figures.

It’s all about the next week as we will get many top-tier economic indicators and the most important NFP report of the year.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Reuters poll – U.S. home prices to rise 5.4% in 2024, 3.3% in 2025, and 3.4% in 2026 (vs 5.0%, 3.3%, and 3.4% in May poll).Reuters poll – U.S. existing home sales to rise to 4.15 million unit rate in Q4, 4.24 in Q1 2025 (vs 4.28 and 4.40 million in May poll).

This article was written by Arno V Venter at www.forexlive.com.

• ECB Muller: confidence is growing in a September rate cut
• ECB Muller: the policy path after the September meeting is less certain

This article was written by Arno V Venter at www.forexlive.com.

EU’s Von der Leyen in Prague at GLOBSEC Forum: Integration of Ukraine in the European Union is for us at the heart of our peace effort.EU’s Von der Leyen: Protecting Europe is first and foremost Europe’s duty.EU’s Von der Leyen: NATO must remain centre of our collective defence but need much stronger European pillar.EU’s Von der Leyen: Central Europe could be one of drivers and one of greatest beneficiaries of this new push for European defence sector.EU’s Von der Leyen: Aim must be to build continent-size defence output, a systemic overhaul of Europe’s defence.EU’s Von der Leyen: We cannot afford any more illusions, the second half of the decade will be high-risk, Europeans must be on guard.EU’s Von der Leyen: We must refocus our attention on the security dimension of everything we do.EU’s Von der Leyen: We must think about our union as intrinsically a security project.

This article was written by Arno V Venter at www.forexlive.com.