Focus on ISM today

Frank Walbaum

lmportant news this week:

Wed, 01st, 15:00 CET US Fed Chairman Warsh Speech
Wed, 01st, 15:00 CET UK BoE Chairman Bailey Speech
Thu, 02nd, 14:30 CET US Nonfarm Payrolls/Average Hourly Earnings

Dollar strength returns as markets await ISM data

The US dollar continues to strengthen, remaining one of the dominant themes across financial markets. While equities have managed to hold recent gains, momentum has slowed noticeably as investors become more cautious ahead of today's ISM Manufacturing PMI. The report will provide another important update on the health of the US economy and could shape expectations ahead of this week's Non-Farm Payrolls release. A stronger-than-expected PMI would likely reinforce the view that the US economy remains resilient, providing further support for the dollar.

Equity markets continue to trade sideways, suggesting that investors are reluctant to take on significant new positions before key economic data. Precious metals remain vulnerable, with Gold and especially Silver at risk of testing recent lows should the dollar extend its rally. The Japanese Yen continues to weaken, with yield differentials remaining firmly in favor of the US Dollar. Meanwhile, FX traders are closely monitoring whether current dollar strength can develop into a broader breakout across major currency pairs.

Market talk

Market sentiment remains cautiously positive but is beginning to lose momentum. A stronger US Dollar is creating headwinds for metals and several major currencies, while equities remain resilient despite limited upside. Investors are now shifting their focus toward today's ISM Manufacturing PMI and Friday's NFP report, both of which could significantly influence expectations for Fed policy. Strong economic data would likely support the dollar further, while weaker figures could revive expectations for future rate cuts and improve sentiment across risk assets. For now, markets remain in wait-and-see mode.

Tendencies in the markets

Equities sideways, USD stronger, BTC weak, oil weak, Silver weak, Gold weak.

Author

Frank Walbaum

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.