The U.S. ISM manufacturing survey is set to impact market expectations on interest rates, influencing the dollar. Meanwhile, Asian currencies react to anticipated U.S. rate cuts, with Australian and South Korean economic data providing regional insights.
Bollywood Fever: As we look ahead in European and global markets, today’s U.S. ISM manufacturing survey stands out as a crucial indicator in a week filled with significant U.S. economic data, which will likely influence the dollar’s trajectory.
Both investors and the Federal Reserve are eager for confirmation that the economic path is clear enough to justify cutting interest rates, as well as insights into the pace at which these cuts could occur.
Recently, traders have scaled back expectations for a 50-basis-point rate cut this month, contributing to a stabilization of the dollar after a two-month decline.
The ISM manufacturing index is expected to come in at 47.5, showing some improvement from the previous month, but still remaining in contractionary territory below the 50 mark.
Additionally, the job market is projected to add 160,000 jobs, with the unemployment rate slightly decreasing to 4.2%.
Should the ISM data fall short of expectations, the dollar may retest recent lows. However, in Asia, a mix of caution and short covering has extended the dollar’s recent rebound.
Asian currencies had previously rallied in anticipation that U.S. rate cuts would give regional economies more flexibility to ease their own monetary policies and stimulate growth.
In the latest Asian session, Australian government spending data revealed a rise in the June quarter, leading the National Australia Bank to upgrade its forecast for Wednesday’s GDP figure.
In South Korea, inflation slowed to a three-and-a-half-year low, further paving the way for potential rate cuts in the near future.
In company news, attention is on a major airline that canceled flights to inspect its Airbus A350 fleet following a failure in a Rolls Royce engine component.
Meanwhile, in Japan, speculation about retail giant Seven & i Holdings seeking national security classification to thwart a buyout bid from Canada’s Alimentation Couche-Tard was addressed by a senior finance ministry official, who pushed back against the rumors.
This mix of economic data and corporate developments is set to keep markets on edge as the week progresses, with the U.S. dollar and interest rate expectations at the forefront of investors’ minds.
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