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Market Wrap
The US PMI manufacturing reading came in weaker than expected this afternoon, which caused traders to further disbelieve that the Federal Reserve are going to announce QE tapering this week at Jackson Hole.
Today’s PMI release showed that manufacturing grew at its slowest pace since December, with a 55.4 reading. Generally, upward trend continued in pricing pressure, causing problems for the manufacturing sector.
New orders also softened to the weakest since December, particularly in services and that suggests that COVID-19 Delta variant is starting to cause the US economy some very real problems, which makes it very difficult for the FED to justify tapering QE at this time.
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The market reaction saw the trends seen earlier this morning, meaning that the US dollar further weakened and global stock markets held onto earlier gains while oil prices continued to rally.
An economist from IHS said “Not only have supply chain delays hit a new survey record high, but the August survey saw increasing frustrations in relation to hiring,” and “Jobs growth waned to the lowest since July of last year as companies either failed to find suitable staff or existing workers switched jobs.”
Looking at some of the top trades of the day, the USDCAD pair has been a constant in terms of weakness and trades below the 1.2700 due to US dollar weakness and oil prices recovering from the lows of last week.
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Gold and silver have been having a big day, with gold recovering above the $1,800 level while silver is trading nearly 2.5 percent higher on the day due to QE expectations being put top one-side now.
Another non-surprise is the GBPUSD pair. Sterling was vastly oversold on taper expectations last week and has rebounded back above the 1.2700 level. We should also consider the UK posted reasonably strong manufacturing data today.
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Bitcoin is trading back under the $50,000 level after moving close to the $51,000 level during the European session. Some traders may be pausing or taking profits ahead of this week’s huge options exploration event.
Market participants now look to a scheduled speech on COVID-19 from Joe Biden later today. The US President is set to update the United States on the ongoing situation pertaining to the spread of the Delta variant.
