Article / 01 September 2016 at 7:00 GMT

Morning Markets: US delivers the goods, dollar rally continues

Head of Editorial Content / Saxo Bank

Morning Markets: Prices


  • Spain: Manufacturing PMI (0715 GMT) 
  • US: Initial Jobless Claims (1230 GMT) 
  • US: ISM Manufacturing Index (1400 GMT) 

Today's European session opens in the wake of a positive ADP jobs release from the US yesterday – 177,000 versus 175,000 expected – and a broad selloff in crude oil that is weighing on sentiment. 

WTI crude tumbled from a Wednesday high of $46.40/barrel to below $44.50 overnight. 

Today's data calendar features Spanish manufacturing PMI numbers for August as well as US initial jobless claims and the ISM manufacturing index; both prints are expected to be scrutinised heavily ahead of tomorrow's key nonfarm payrolls release. 

The Asian equities session was largely flat following a soft open and the US dollar continues to gain ground in the major pairs, most notably EURUSD and USDJPY. 

The dominant narrative in world markets continues to be the US' potential ability to hike rates, whether at the September 20-21 Federal Open Market Committee meeting or sometime after, with the possibility of a rate hike indicating the first step out of continuous policy easing by a major developed economy in some time.

Market signals

Asian session

  • New Zealand's quarterly overseas trade index fell 2.1%; minus 1.4% was expected
  • Australia's AIG manufacturing index dropped by 9.5 points to 46.9 points in August 
  • Aussie business investment fell by 5.4% in the June quarter, below forecasts of a 4% fall
  • Japan's capital spending rose 3.1% over the quarter; 5.6% was expected
  • Activity in China's manufacturing sector unexpectedly expanded 
  • The official PMI rose to 50.4 in August, compared with the previous month's 49.9 
  • The strong China data boosted the AUD as well as most industrial metals 
  • Copper rose 0.5% and nickel gained 1% after the data was released

Forex ahead

  • The Aussie rose to $0.7530 on a surprise expansion in China's manufacturing sector
  • Brazil's real rose 0.3% after Dilma Rousseff's impeachment
  • The NZD was the only G10 currency to end August on a positive note
  • In Asian trade, JPY strengthened 0.2% to 103.25 per dollar
  • USD continues to gain ground versus the euro and yen
  • CAD sells off on pronounced tumble in WTI crude oil

From the Floor

Rate move.The odds are higher for a Fed move in rates in the near term than is priced in”, says Hardy.

$500m sting.Tesla will be forced to pay out $500 million which means it will be looking for additional capital... you should definitely be short Tesla”, says Garnry. 

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

If today’s manufacturing PMI numbers for Spain move closer to 50, the news will unleash fresh speculation that the country's recovery is vulnerable, writes James Picerno.

September perfection
A Federal Reserve rate hike in September equates to 'timing perfection' as long as the nonfarm payrolls hold up. Kay Van-Petersen outlines the reasons why it makes sense.

Asian slippage
Markets in Asia opened mostly lower on Thursday, with sentiment weighed by sharp overnight declines in oil prices, says Singapore's Saxo trading team.

Liquidity at risk?

The US Securities and Exchange Commissionis introducing new money market rules and one byproduct might very well be a liquidity risk, writes Steen Jakobsen.

Houston, texas

All systems go? The US data have not shaken off markets' expectations of a near-term 
rate hike, and the greenback is raking in the gains. Photo: iStock

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