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The US dollar index (DXY) rose by +0.50% following hawkish comments from Kansas City Fed President Schmid, who indicated a need for more economic data before considering interest rate cuts. In the job market, weekly initial unemployment claims increased by +4,000 to 232,000, aligning with expectations, while continuing claims also rose by +4,000 to 1.863 million, below the anticipated 1.870 million. The S&P August US manufacturing PMI fell to 48.0, its lowest in 8 months, down -1.6 from the previous month and below expectations of 49.5.
In the Eurozone, the August manufacturing PMI dropped -0.2 to 45.6, also below expectations, while the consumer confidence index unexpectedly fell -0.4 to -13.4. The ECB reported a decrease in negotiated wage growth to +3.6% y/y for Q2, down from +4.7% y/y in Q1, raising concerns about economic momentum. Swaps currently indicate a 98% probability of a -25 basis point rate cut by the ECB at the upcoming September meeting.
In Japan, the August Jibun Bank manufacturing PMI rose +0.4 to 49.5, and the services PMI increased to a 4-month high of 54.0. The USD/JPY increased by +0.90% as bond yields rose, reducing safe-haven demand for the yen. Precious metals, including gold and silver, fell sharply due to the strengthening dollar and high global bond yields, with gold down -1.40% and silver down -1.46%.
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