US Dollar Awaits ISM Manufacturing Data Amid Rate Cut Speculation

The US ISM manufacturing survey is expected to show an improvement to 47.5, signalling ongoing contraction, while the job market is forecast to add 160,000 jobs with a slight drop in unemployment to 4.2%. The US dollar, which has stabilised after a recent selloff, is closely watched as investors assess the likelihood of interest rate cuts. In Asia, currencies gained, and Australian economic data led to an upgraded GDP forecast, while South Korean inflation hit a three-and-a-half-year low, suggesting imminent rate cuts.

Equities

The FTSE 100 slipped by 0.2% on Monday, reflecting cautious sentiment in European markets. The dip comes as investors brace for a significant week of economic data that could influence interest rate decisions. The index’s decline was partly driven by weaker economic data from China, which impacted industrial and consumer discretionary sectors. British stocks mirrored broader European trends, with many key players holding their breath ahead of the upcoming US jobs report.

Turning to the US, the S&P 500 futures were down by 0.1%, while the Nasdaq 100 futures remained flat as traders awaited the return of the markets following the Labor Day holiday. Despite the recent recovery in the S&P 500, which now sits just 0.4% off its record high, investors remain cautious.

The dollar index showed slight weakness, down marginally at 101.68, after reaching a two-week high. The US dollar’s performance against the yen was more pronounced, climbing by 0.55% to 146.96. The US stock market’s reaction to this week’s economic data, particularly Friday’s jobs report, will be closely watched as it could influence the Fed’s monetary policy decisions.

In Asia,Hong Kong’s New World Development saw its shares plummet by 14% following an estimate of a net loss, reflecting the broader challenges facing the property market in China.

Forex & Commodities

The US dollar edged higher, nearing a two-week peak at 101.77, as traders focused on upcoming economic data, including Friday's US payrolls report, which could influence the size of an anticipated interest rate cut from the Federal Reserve. The euro slipped 0.16% to $1.1055, while sterling fell 0.17% to $1.3124, both holding near recent lows.

Gold prices eased slightly, with spot gold down 0.2% at $2,495.50 per ounce as investors awaited US economic data. US gold futures steadied at $2,527.50. Analysts suggest gold could reach $2,640 this year if data points to a weaker US economy, prompting a larger Fed rate cut.

Oil prices ticked up, with Brent crude futures rising 0.8% to $77.52 a barrel, recovering from last week's declines. US West Texas Intermediate crude also gained 0.7%, settling at $74.04 per barrel. The recovery comes as Libyan oil exports remain halted amid ongoing political tensions, although OPEC+ plans to increase production from October, potentially capping further price gains.