US August employment report – Week’s main event – Societe Generale
FXStreet (Delhi) – Kit Juckes, Analyst at Societe Generale, expects the week’s main event is going to be the release of the US August employment report on Friday. In addition, a sharp bounce in oil prices and a further attempt by the PBoC to ease pressure on the CNY by imposing a ‘foreign exchange risk reserve’ on CNY forward FX transactions have dominated markets.
Key Quotes
“We’ve also see unchanged policy from the RBA, the biggest Australian current account deficit since 2009, and a drop in the Chinese manufacturing PMI to 49.7, the lowest in three years. The net effect of all this, is a weaker dollar, which today is reacting more to softer US short-dated yields than to risk aversion.”
“The driver of the dollar is, for now, the front end of the US yield curve. We’d been seeing yields edge up within a range, but the soft Chinese data were matched with weakness elsewhere and point to a danger that today’s US manufacturing ISM will be below expectations. SG Economists look for 51.8 after 52.7 last month. That will add to the debate and uncertainty about Fed policy, but it probably won’t help the dollar today.”
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