Markets leaning toward a 25bps rate cut after Friday’s PCE data
Friday’s US PCE price index data was largely in line with market expectations, and after an initial fairly muted reaction, we saw the Dollar close the week on a stronger note at 1.1047, 1.3126, and 146.16 against the Euro, Pound, and Yen respectively. The greenback is trading unchanged this morning in a very quiet Asian trading session and with the US markets closed for the Labour Day holiday today, we are likely to remain in fairly narrow trading ranges for now. Later this week, we have the all-important US nonfarm payrolls and unemployment numbers, which will provide clues as to whether the labour market has cooled further. The Rand traded strongly on Friday, touching the R17.60 level at one stage, but the recovery in the Dollar saw the Rand retreat quite sharply to close at R17.8217. This morning, we have the local currency softening further to be trading at R17.887, which is in line with softer EM markets.
Gold below $2,500 as the strong Dollar weighs on markets
Gold has fallen to $2,497 this morning on the back of the firmer Dollar, while Platinum and Palladium are flat at $927 and $967, respectively. Copper, Nickel, and Zinc have also opened weaker this morning as concerns over demand out of China continue to keep base metals on the back foot. Brent crude has also started the new week on a weaker note, down 0.75% at $76.38, as traders monitor possible higher OPEC+ output and softer US and Chinese demand.
