(03 september 2018)DAILY MARKET BRIEF 1:Dollar holds ground ahead of busy week
After extending gains against most of its peers amid renewed concerns over trade tensions, the greenback started the week slowly and consolidated gains. The dollar index stabilised around 95.10 as EUR/USD rose 0.15% to 1.1618, while the pound sterling eased -0.33% to 1.2917 as a no-Brexit deal continued to weigh. Market participants remained cautious as NAFTA negotiations between the US and Canada are still going on.
Despite a busy week in term of economic data, political and geo-political developments will remain the main driver in the FX market this week. In the US, August’s ISM manufacturing will be release on Tuesday; ADP employment change will be published on Wednesday; August’s ISM non-manufacturing PMIs and durable goods orders will be release on Thursday; finally, the labour report is due on Friday (NFPs, unemployment and wage growth).
Recently, the Federal Reserve has turned more dovish and traders are not so confident the central bank will continue to hike rates aggressively next year. The market has priced two more rate hikes for this year but doesn’t know where to stand regarding next year. Therefore, a positive surprise in Friday’s labour report will have a limited impact on markets, while a negative surprise could weigh significantly on the greenback.
By Arnaud Masset
