U.S. Review
U.S. Economy Keeps on Trucking
- The housing recovery remains on track with existing home sales rising 2.0 percent in July and starts continuing to rise.
- Early readings on the manufacturing sector for August were mixed, but on balance suggest activity in the factory sector continues to expand at a modest pace.
- The consumer price index came in a bit lower than expected for July but the trend in inflation remains steady. Minutes from the July FOMC meeting showed “some” Fed officials were not yet confident that inflation is moving back to target, but “most” noted conditions for liftoff were “approaching.”
Global Review
Disconcerting Drop in Chinese PMI- A widely followed measure of Chinese private sector manufacturing activity fell in August. The weaker-than-expected 47.1 figure marks the lowest reading since the global recession in 2009 and sparked a fresh round of selling in what was already a rout in global financial markets. The volatility in emerging markets is the Topic of the Week on page 7.
- In the Global Review on page 4, we highlight major developments for the global economy including Japanese GDP and what the latest inflation data in the U.K. and Canada mean for monetary policy in those economies.
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Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.