Monday morning market conditions are marked by low trading volume as Asian centers open, which can cause price swings. The foreign exchange rates are mostly stable compared to Friday’s closing. Here are the latest rates: – EUR/USD: 1.1694 – USD/JPY: 147.09 – GBP/USD: 1.3503 – USD/CHF: 0.7993 – USD/CAD: 1.3737 – AUD/USD: 0.6545 – NZD/USD: 0.5897

Economic Agenda Highlights

Today’s economic highlights include China’s manufacturing PMI, reported at 49.4, slightly below the expected 49.5. The services PMI is in line with expectations at 50.3. Recently, a US Federal Appeals Court ruled that many tariffs imposed by Trump were unlawful. Additionally, Alibaba has announced plans to develop new AI chips. This week, market focus will also be on US non-farm payroll numbers, ISM PMIs, Eurozone’s Flash CPI, UK retail sales, and Canadian employment stats. As we enter the first week of September 2025, thin market liquidity increases the chance for larger price movements on minor news. The key events this week, especially US jobs data and manufacturing reports, will be crucial. Derivative traders should remain cautious with early week positions until trading volume increases. Fed Chair Powell is under intense pressure, especially with continued criticism from Trump. Recent core PCE inflation data was as expected, but the anticipated Non-Farm Payrolls (NFP) report has captured the market’s full attention. The last two NFP reports in mid-2025 fell short of expectations; if another weak report comes in, it could lead to changes in policy and increased volatility in interest rate futures. There’s clear evidence of a slowdown in China, with the official manufacturing PMI for August at 49.4, indicating contraction. The private Caixin Manufacturing PMI also dropped to 49.2, confirming official data and marking the weakest reading in seven months. This could negatively affect commodity-linked currencies, suggesting that short positions on the Australian dollar through options might be a worthwhile strategy.

The Impact of US Jobs Data

The US dollar is experiencing mixed pressures, making it tricky to trade. Weakness in China usually supports the dollar as a safe-haven currency. However, the recent court ruling about the illegality of most of Trump’s tariffs might weaken a key source of dollar strength from the late 2010s and early 2020s. With USD/JPY at 147.09, this currency pair is highly sensitive to the upcoming US jobs data and any changes in interest rate expectations. We’ve seen how quickly this pair can move during the Bank of Japan’s interventions in 2022 and 2023, so buying out-of-the-money puts could provide an inexpensive way to hedge against a sharp decline. Meanwhile, with EUR/USD at 1.1694, upcoming Eurozone inflation figures will be essential to determine if it can break above the major resistance level tested in late 2023. The political landscape introduces additional risks that are hard to predict. The tariff ruling and ongoing public criticism of the Fed increase headline risk. In this environment, using derivatives to manage risk is more sensible than relying solely on basic stop-loss orders, which could be easily triggered by a tweet or news flash. Create your live VT Markets account and start trading now.

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