US Dollar flat with markets enjoying a US holiday on Monday

NEW YORK (September 2) The US Dollar (USD) sidelines on Monday with a very mixed picture on the quote board against most major currencies. The US Dollar kicks off this week with a calm due to the Labor Day holiday in the US, but the economic calendar will be picking up speed towards the main event on Friday. The first Friday of the month will bring the US Jobs Report, with the Nonfarm Payrolls and other wage data for markets to move on. 

Apart from the all-important payroll data, the calendar will also feature the Purchasing Managers Index (PMI) data, which tends to move markets as it gives fresh clues about the state of the economy. This could mean that the US Dollar Index might have moved already substantially ahead of Friday’s main event. 

Daily digest market movers: Labor day hiatus

• US markets are closed on Monday in observance of Labor Day.
• China has warned Japan over economic retaliation over potential chip curbs, according to Bloomberg. 
• On Saturday, the release of China’s  Purchasing Managers Index numbers for August signaled that the contraction in the country’s manufacturing sector persists. The PMI came in at 49.1, lower than the 49.4 seen a month earlier. 
• Equities are struggling across the board, with minor losses for all European indices and US futures on the back foot as well. 
• The CME Fedwatch Tool shows a 69.0% chance of a 25 basis points (bps) interest rate cut by the Fed in September against a 31.0% chance for a 50 bps cut.  Another 25 bps cut (if September is a 25 bps cut) is expected in November by 48.9%, while there is a 42.0% chance that rates will be 75 bps (25 bps + 50 bps) below the current levels and a 9.1% probability of rates being 100 (25 bps + 75 bps) basis points lower. 
• The US 10-year benchmark rate trades at 3.90% and will not move as bond trading in the US is closed on Monday. 

FXStreet