Blames volatility in the data
After forecasting 3.8% GDP growth in last week’s report, the NY Fed has suspended the data tracker — likely because it would have shown something much lower this week.
The uncertainty around the pandemic and the consequent volatility in the data have posed a number of challenges to the Nowcast model. Therefore, we have decided to suspend the publication of the Nowcast while we continue to work on methodological improvements to better address these challenges.
There’s no word on when it will resume.
FDA wants more time to review data
The New York Times reports that officials have told the White House to scale back plans to offer covid booster shots to the general public by Sept 20.
The FDA warned it might only recommend boosters for Pfizer vaccine recipients and possibly only some of them to start. On Moderna, the report
Among the reasons for delaying is that regulators need more time to decide the proper dosage for a possible third Moderna shot. The company’s application asking the F.D.A. to authorize a booster shot contains insufficient data, one federal official familiar with the process said.
The FDA hasn’t received the raw data from Israel, which is already delivering third doses to everyone.
It’s Labor day (and next Tuesday will be a slow one as well)
Look for trading to thin out early today with the US and Canada headed for a long weekend.
The New York Stock Exchange is closed Monday while here’s a look at the CME schedule:
In the bond market, SIFMA didn’t recommend an early close today.
In Canada, the TSX is closed and FX desks will be lightly staffed. The BOC decision is Wednesday.
Latest data released by Markit – 3 September 2021
- Composite PMI 59.0 vs 59.5 prelim
The preliminary report can be found here. A bit of a revision lower as noted with the German report earlier but this just reaffirms a resilient expansion in euro area services activity despite a slight slowdown in momentum. Markit notes that:
“It was another solid result for euro area businesses in August, according to the PMI numbers, which still point to rapid rates of expansion in output and demand. The labour market is also performing well and will further encourage this domestic-driven growth spurt.
“The benefit of looser lockdown restrictions has fuelled two of the best expansions since mid-2006 in July and August, but a step down since the preliminary ‘flash’ number tells us that this growth momentum is fading.
“While growth will naturally lose some impetus as the post-lockdown boom peters out, there are a number of other downside factors at play. The Delta variant has taken hold in Europe, while further material shortages and transport bottlenecks continue to restrain business activity. Rampant cost increases also persist, but slightly weaker rates of input and output price inflation provided some respite to both businesses and consumers alike, however.
“Regardless, another strong quarter-on-quarter rise in GDP is on the cards for the third quarter, and we’re certainly on track for the eurozone economy to be back at pre-pandemic levels by the end of the year, if not sooner.”
NZD/USD is up 0.3% on the day, trading to its highest since 16 June
The aussie and kiwi are the two movers so far on the session, as they are continuing their good form over the past two weeks in pushing higher against the dollar.
The moves aren’t much (<30 pips range) but we are seeing key technical levels being contested with AUD/USD pushing past 0.7400 and testing resistance at 0.7427.
Meanwhile, NZD/USD is climbing to its highest since mid-June and is staying in the hunt of a break of its 200-day moving average (blue line) @ 0.7113 today.
Keep above that and the bias in the pair turns more bullish as buyers establish more control, leaving room to run back towards the May highs around 0.7300.
Of course, the caveat for the early move today is the US non-farm payrolls data later but at least the kiwi side of the equation is looking more positive this week.
New Zealand seemingly looks to have gotten the latest COVID-19 outbreak under control and that is seeing RBNZ rate hike expectations (perhaps even 50 bps) coming back to the fore going into the October policy meeting.
That should keep the kiwi underpinned so long as risk sentiment, as it is now, also holds up in the weeks ahead.
AUD/USD trades to a fresh one-month high of 0.7425
Buyers are now looking to contest the 4 August high @ 0.7427 and are keeping poised in search of a firm break above the 0.7400 handle today.
The sentiment in the pair this week has been favourable for the aussie and the overall view on the pair remains unchanged from yesterday:
For now, the technicals are supportive for the aussie against the dollar and it points towards a potential test of 0.7400 again, where upside momentum stalled previously during July and August trading.
As such, that offers a key line in the sand for buyers to contest in order to establish any fresh upside leg while sellers will have to defend that to hold their ground.
As things stand, the dollar side of the equation is a key consideration this week with the US non-farm payrolls release
tomorrow today a key risk event.
That will set the tone towards the end of the week but a poor jobs report may yet spur a fresh break for AUD/USD to the upside back towards 0.7500 potentially.
Otherwise, we may see more of a middling tone ahead of the weekend with 0.7400 capping gains with downside limited closer to key near-term levels at
0.7275 0.7300 and 0.7316 0.7344.
As highlighted above, a lot depends on the US non-farm payrolls release later today to validate or invalidate the latest push higher in the pair.
But for now, aussie buyers are certainly showing that they are more than ready to capitalise on a poor report and secure a fresh upside break towards 0.7500.
Reports in Japanese media say that Prime Minister Suga will step down
- Will not run in the leadership ballot for his party this month.
Kyodo with the report, via Reuters .
Nikkei futures have popped on the news and USD/JPY is up around 10 points. Yesterday a contender for the leadership, Kishida promised a broad swathe of fiscal support.
- Suga to resign as PM on September 30.
- Will spend his time until then focusing on measures to address the coronavirus pandemic and associated economic damage.
Anyway, so say the reports, we haven’t heard anything from Suga himself on this.
Suga was all-powerful as Chief Cabinet Secretary during former Prime Minister Abe’s terms in office. Suga’s time as PM has not been so successful for him.