Dollar softens as disinflation signals cool the front end
Treasuries bull steepened Thursday after a Fed official noted early signs of disinflation and flagged an inclination to hold rates steady. Two-year yields fell as much as 6bp intraday before paring, as the same official cautioned little inflation acceleration would nudge them toward tighter policy, and as ISM services surprised firmer (55.4, prices paid highest since 2022 at 72.6). The internals were strong — new orders and business activity at multi-year highs. Jobless claims edged up 2k to 206k; the trade deficit widened to $88.6bn. All eyes now on NFP (Fri), consensus near 55k. US Labour Day Monday keeps cash closed.
US equities rallied on the dovish lean. S&P 500 +1%, Nasdaq +1.4%.
Bank Negara Malaysia held the OPR at 2.75% with a slightly hawkish tilt. Regional equities were mostly softer — Hang Seng −0.4%, Nikkei −0.2%. NZ home prices slipped to a 3yr low.
In FX, AUD/USD was up 0.45%, while NZD/USD was up 0.5%. In Asia, USD/SGD was down 0.3% and USD/CNH was little changed.
Australian services growth cools as business optimism climbs
Australia’s services sector expanded for a third month straight in August, although growth eased slightly. The S&P Global services PMI slipped to 53.2 from 53.6, while the composite PMI edged down to 52.7 from 53.2 as manufacturing output weakened. New business in the services sector increased for a second consecutive month, helping lift business confidence to its highest level in six months despite softer overseas demand. Transport and storage recorded the strongest gains, while information and communication activity contracted. Businesses continued to face higher fuel and labour costs, but the pace of price increases charged to customers slowed from July.
Initial support for AUD/USD is located at the 21-day EMA of 0.7133, followed by the 50-day EMA at 0.7084. On the upside, the next key resistance level is 0.7250. Meanwhile, AUD/CNH has climbed to a three-month high.
US dollar weakens ahead of pivotal jobs report
The US dollar, as measured by the benchmark USD index, was at one-week lows ahead of today’s US jobs report.
The closely watched non-farm payrolls figure is forecast to rise by 55k after last month’s disappointing decline of 23k.
Earlier this week, other key labour market data painted a mixed picture. The Job Openings and Labor Turnover Survey (JOLTS) showed an increase in job openings, while private-sector payrolls data from ADP came in below expectations at 38k versus a forecast of 47k.
The greenback has traded mostly sideways this week, moving within a narrow 0.7% range. However, ahead of the 16 September Federal Reserve decision, tonight’s US jobs report could prove critical in determining the short-term direction.
The US jobs report is due at 10.30pm AEST.
USD below key psychological 99 level
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: 31 August to 4 September
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
