Here is what you need to know on Wednesday, September 2:
The US dollar has been paring its massive Fed-fueled losses recorded in recent days. The upbeat ISM Manufacturing PMI was one of the reasons and Wednesday's focus is the ADP Non-Farm Payrolls Fed events.
The dollar is fighting back: The greenback has been gaining ground across the board. Apart from profit-taking, the main US-related driver came from the ISM Manufacturing Purchasing Managers' Index which beat estimates with 56 – the highest since 2018.
Investors shrugged off the PMI's downbeat employment component, indicating weakness in hiring. ADP's private-sector jobs report provides another clue toward Friday's Non-Farm Payrolls, with an expected increase of over one million.
See ADP Employment Change and Initial Jobless Claims Preview: Hope is not change
The Federal Reserve's dovish policy shift pushed the greenback down beforehand. Lael Brainard, a permanent voter on the bank's board, reiterated the need for accommodative policy. Her colleagues Lauretta Mester and John Williams will speak today. Also, the Fed releases its Beige Book – a document providing reports from the bank's regional offices.
US Treasury Secretary Steven Mnuchin said that the administration would like to inject fresh fiscal stimulus and stressed the need to address the lapsed federal unemployment claims. Talks between Republicans and Democrats remain deadlocked.
EUR/USD dropped from above 1.20 to around 1.19, hit by Philip Lane, the European Central Bank's chief economist. He said that the exchange rate matters for the ECB, setting the spark for the correction. Eurozone inflation fell short of estimates while Germany upgraded its forecasts.
GBP/USD is hovering below 1.34, off the new 2020 high of 1.3483. The fate of the successful furlough scheme and additional restrictions are eyed as Prime Minister Boris Johnson goes to parliament for the first time after the summer break.
AUD/USD is trading below 0.74 after topping that level. Australia's Gross Domestic Product fell by 7% in the second quarter, worse than expected and exacerbating the currency pair's falls.
Sino-American tensions are somewhat on the backburner yet investors are watching negotiations to sell popular Chinese media app TikTok to an American suitor. President Donald Trump reiterated that the deadline is September 15 and that the US government should be compensated.
US politics: Trump narrowed the gap with rival Joe Biden after the conventions as the focus remains on police and protests with two months to go until the vote.
Gold is trading around $,1960, off the highs, and maintaining its inverse correlation with the dollar. Oil prices are stable at around $43 for WTI ahead of inventory data.
Cryptocurrencies have been consolidating their gains with Bitcoin hovering closer to $11,900 and Ethereum extending its gains en route to $500.
More Markets are Fed-dependent as ever, reaction to elections could surprise – Interview with Lior Cohen
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