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September brought some additional recession-related concerns to almost all financial markets, however; the American dollar surged, helped by positive US data and the negative market sentiment.
The EUR/USD pair trades around 0.9950, while GBP/USD plunged to 1.1497, now trading around 1.1540. Commodity-linked currencies finished the day mixed, as AUD/USD is down to 0.6780 while USD/CAD is steady at around 1.3160. The USD/JPY pair surged to 140.22, its highest in over twenty years, now trading a handful of pips below the level.
Economic Data
The ISM Manufacturing PMI report showed better-than-expected numbers, helping dollar’s rally. The ISM Manufacturing PMI arrived at 52.8 in August, showing that the business activity continued to expand at the same pace as it did in July. This data came in better than the market expectation of 52.
S&P Manufacturing PMI declines to 51.5 (final) in August versus the expected 51.3. US factory production was down for a second month running in August, with demand for goods having now fallen for three straight months amid the ongoing impact of soaring inflation, supply constraints, interest rate hikes and growing economic uncertainty.
Other Developments
China announcing Chengdu, a city of roughly 21 million people, has been put on coronavirus lockdown. On the European front, the focus is still on energy crisis by EU’s planned market intervention to cap energy prices and cut electricity demand after Russia slashed gas deliveries to the member states. President Ursula Von der Leyen will speak on the issue on September 14.
Russia officially announced the high probability of oil output hiking this year, supporting OPEC+ deal extension beyond 2022. At the same time, Gazprom is cutting gas provision to France, while Germany’s fears accelerate of shutting down the Nord Stream 1 pipeline once again mid-October.
US shares are under pressure, although Wall Street’s losses were moderate. The DJIA managed to post a modest intraday advance. The Dollar Index soared to a multi-year high, while government bond yields also rose. As for gold, the precious metal is struggling around $1697.40 ahead of the US Non-Farm payrolls report.
On Friday, the US is expected to have added 300K new jobs in August, while the Unemployment Rate is expected to read steady at 3.5%.
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