ISM

Last week we noted that bond yields could trump economic data this week, and for the most part they did. We can also extend that comment into next week, especially if they continue to retreat and loosen their grip on bearish sentiment and allow risk assets to rebound. Highlights in next week’s calendar include the NFP and ISM PMI reports, RBA and RBNZ monetary policy meetings, the quarterly Tankan survey for Japan and Canada’s employment report.

The Bank of Canada (BOC) are expected to hold rates at today’s meeting, given GDP unexpectedly contracted in Q2. Still, implied volatility has spiked higher for USD/CAD. Perhaps the BOC pause will not be as dovish as expected, Fed members tout a hold or the rise of bond yields (and therefore the US dollar) lose steam. If so, USD/CAD may be better for short bets beneath the April highs.

It's the last trading week of August, and it's fair to say that market conditions were more volatile and eventful than this time of year tends to provide. At the time of writing, we're yet to hear what Fed Chair Jerome Powell has to say, but it could certainly set the tone for next week's trade. And there is no shortage of data to kick off September, including US PCE inflation, GDP, and the ISM manufacturing survey. Final PMIs are also published for the US, UK, Europe, Japan, and Australia. And incoming RBA Governor Bullock speaks, and a host of Australian data includes CPI, retail sales, home loans, and capex.

The RBA meet on Tuesday in what could be Governor Lowe’s final meeting, so will he go out with a 25bp bang of fade away with a pause? Employment data for the US includes Nonfarm payrolls, ADP and claims data, and traders also have ISM manufacturing and services reports to look forward to.

Weak PMI and ISM data has renewed concerns of a US recession, which saw the 10-year – 3-month hit its most negative level since the 80’s.

Oil prices have stabilised following OPEC’s surprise oil production cut, which now allows traders to switch their focus over to Swiss inflation, flash PMI and ISM reports.

Depending on how you look at it, good data is not always good to see. And that’s what could make today’s ISM report the more interesting if it comes in hot.

Whilst GBP as under pressure from talk of tax hikes, GBP/USD remains above a key support level ahead of today’s ISM and JOLTS job opening reports.

Earnings continued to exceed expectations and propelled indices to new record highs, despite supply chain issues weighing on US productivity.

GBP/USD closed beneath its 200-day eMA on Friday, and today’s ISM manufacturing data could be the difference between recovering back above it or extending its decline.

An exceptional start to the month for US economic data has seen trader’s price in the first rate-hike in 2022, send equities soaring and weigh on the US dollar.