US dollar rises, contributing to the DXY’s weakening.
The US Dollar (USD) trades largely flat on Tuesday, as the trading week begins after US markets were closed on Monday for Labor Day. The US dollar is slightly higher versus practically every major currency on the quote board, with the exception of the Japanese yen.
US markets resume trading after the Labor Day holiday, and investors are anticipating ISM PMI data.
Meanwhile, markets tremor somewhat on the basis of news that German automaker Volkswagen is considering closing manufacturing in its native nation for the first time before, which is a devastating blow to the German government and the European economy. Moreover Tuesday’s economic agenda includes the August Institute for Supply Management (ISM) Manufacturing Survey. Traders will be able to evaluate how the US industrial sector is holding up. Given recent stories out of Germany, a clear separation between the two countries might propel the DXY upward.
Daily Market movers: Will US ISM outperform Europe? US Dollar approaching an important resistance level, indicating a potential breakout.
At 13:45 GMT, S&P Global will issue the final Manufacturing data from the August Purchasing Managers Index. The preliminary reading was 48 and is not expected to be altered.
At 14:00 GMT, the Institute for Supply Management (ISM) will issue its Manufacturing figures for August.
The headline PMI is predicted to move to 47.5. from 46.8.
The Prices Paid component should rise to 52.5 from 52.9.
Furthermore In July, the new orders index was 47.4, while the employment index was 43.4.
Apart from the ISM, the TechnoMetrica Institute of Policy and Politics (TIPP) will release its September economic optimism poll. The previous reading was 44.5, with 46.2 predicted.
Following the German stories about Volkswagen, both US and European shares have taken a hit. Markets are concerned about another slowdown in manufacturing globally, rather than just in Europe.
Moreover The CME Fedwatch Tool predicts a 69.0% chance of a 25 basis point (bps) interest rate drop by the Fed in September, against a 31.0% possibility of a 50 bps cut. Another 25 basis point cut (assuming September is a 25bps Cut) is projected by 49.9% in November, with a 41.5% chance that rates will be 75 basis points (25 bps + 50 bps) lower than present levels and an 8.6% chance that rates will be 100 (25 bps + 75 bps) lower.
The US 10-year benchmark rate is currently trading at 3.91%, down marginally from its starting rate of 3.93%.
