The U.S. dollar index (DXY) is down 0.03% today, remaining just above a 3.25-month low as positive stock performance reduces demand for dollar liquidity. The latest economic reports show mixed results: the August S&P manufacturing PMI decreased to 53.2 from 53.9, while the S&P services PMI rose to 56.8, surpassing expectations of 54.0 and marking the fastest growth in 4.5 years. Market analysts currently assess a 39% probability of a 25 basis point rate hike at the next FOMC meeting on September 15-16.
In Europe, the euro has strengthened, matching a 3.25-month high, supported by an unexpected rise in the Eurozone August manufacturing PMI to 52.8 and a composite PMI of 52.1. Consumer confidence also improved, hitting a six-month high. The European Central Bank may raise rates by 25 basis points at its next meeting, with the market pricing in a 94% chance of this outcome on September 10.
Meanwhile, Japan’s economy showed robust growth, with the August S&P manufacturing PMI rising to 55.1, the strongest in 8.5 years. July CPI rose 1.9% year-on-year, aligning with expectations. There is an 82% probability of a 25 basis point BOJ rate hike at the upcoming September 18 meeting. Precious metals like gold are also witnessing gains, supported by a weaker dollar and strong demand, with gold reaching a 3.25-month high.
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