September 1, 2021 - Financial Occultist

Commodity currencies still hold a slight lead on the day with the yen and franc the laggard, as risk tones are keeping more positive so far in European morning trade.

European indices are posting solid gains with S&P 500 futures and Dow futures also up 0.4%, while Nasdaq futures are up 0.1% on the session so far.

That said, FX isn’t really moving all too much with AUD/USD still keeping a slight advance of 0.3% around 0.7330-40 for the most part. Meanwhile, NZD/USD is off earlier highs of 0.7065 and is trading around 0.7050 currently – up just 6 pips on the day.

Elsewhere, EUR/USD is still napping somewhat as it trades in and around 1.1800, now seen at 1.1813 after trading around the lows earlier at 1.1795.

USD/JPY is perhaps the most notable mover as the pair extends a push above 110.00 to 110.30 with the high today touching 110.41 earlier:

Buyers are keeping a defense of the 100-day moving average (red line) and the trendline support, with price now up to its highest since 13 August.

A test of light offers closer to 110.50 is on the cards with further resistance seen closer to the daily highs in the region of 110.60-80.

That said, any major upside extension may require Treasury yields to conform and 10-year yields have settled down a little after an earlier push above 1.33%, now keeping closer to 1.315% in mid-morning in Europe.

Eurozone August final manufacturing PMI 61.4 vs 61.5 prelim

01-Sep-21 02:10 pm

Anirudh Sethi

Latest data released by Markit – 1 September 2021

The preliminary report can be found here. Factory activity growth eases to a six-month low but it comes off the back of a very strong run in the past few months, spurred by the latest economic reopening going into the summer.

Output and new orders are seen lower but are still registering modest expansions, keeping overall activity at elevated levels despite major issues posed by supply chain disruptions – likely to be more evident in the months ahead. Markit notes that:

“Eurozone manufacturers reported another month of buoyant production in August, continuing the growth spurt into its fourteenth successive month. The overriding issue was again a lack of components, however, with suppliers either unable to produce enough parts or are facing a lack of shipping capacity to meet logistics demand.
“These supply issues were the primary cause of a shortfall of manufacturing production relative to orders of a magnitude not previously recorded by the survey, surpassing the 24-year record deficit seen in July.
“Factory selling prices consequently rose steeply once again, albeit with some of the upward pressure alleviated by a slight cooling of input cost inflation, albeit with still-high materials prices adding to manufacturers’ problems.
“Employment growth meanwhile eased only modestly from July’s all-time high as producers remained focused on boosting operating capacity. However, a dip in future sentiment in August – linked to the peaking of demand, persistent supply chain issues and the spread of Delta variant – add to signs that both output and employment growth has peaked.”

OPEC+ said to be set to stick with latest output policy at its meeting today

01-Sep-21 02:09 pm

Anirudh Sethi

A tweet by energy market journalist, Reza Zandi

An informed source has intimated that considering the outcome of the JTC meeting yesterday, it appears that the #OPEC plus meeting today will continue its previous policy; i.e., roll-over of the same increase of 400 thousand barrels per day

That is to be expected given the latest circumstances and reports that we have seen emerging since the weekend. That said, don’t discount any surprises going into the meeting later today. I mean, it is OPEC+ after all.

China private survey manufacturing PMI data due today – how its different to the official PMI

01-Sep-21 05:26 am

Anirudh Sethi

Coming up at 0145 GMT China Caixin Manufacturing PMI for August

expected 50.2, prior 50.3
China official PMIs for August: Manufacturing 50.1 (expected 50.1) & Services 47.5 (expected 52.0)

I’ve posted on the difference between the official and private survey PMIs before, so this is a repeat, but ICYMi:

The official PMI and Caixin PMI are different surveys, of different firms, with different characteristics, so they often have diverging results.
In brief, the Caixin/Markit surveys smaller firms than does the official survey from China’s National Bureau of Statistics/China Logistics Information Center.

US Congress to investigate risks related to Chinese stock market listings on American exchanges

01-Sep-21 05:20 am

Analysis

Anirudh Sethi

An overnight report on an upcoming hearing by a U.S. House of Representatives panel – set for September 22:

Will examine the risks related to Chinese stock market listings on American exchanges.
Subcommittee on Investor Protection, Entrepreneurship and Capital Markets hearing

Info via Reuters, a little more at the link.