The Labor Day market holiday for Chinese and European markets led to a calm start for most risk assets, before volatility once again picked up on top-tier U.S. data and earnings reports.
Trade and political headlines also made waves, as White House officials suggested progress in tariff discussions with China, while crude oil chalked up another day in the red.
Here are the updates you need to know.
Headlines:
- Australia S&P Global Manufacturing PMI Final for April 2025: 51.7 (51.7 forecast; 52.1 previous)
- Japan Jibun Bank Manufacturing PMI Final for April 2025: 48.7 (48.5 forecast; 48.4 previous)
- Australia Balance of Trade for March 2025: 6.9B (4.9B forecast; 2.97B previous); Exports: 7.6% m/m (-3.6% m/m previous); Imports: -2.2% m/m (1.6% m/m previous)
- BOJ kept interest rates on hold as expected but downgraded growth forecasts for this year and the next
- Japan Consumer Confidence for April 2025: 31.2 (33.8 forecast; 34.1 previous)
- Reuters reported that the fourth round of U.S. talks with Iran over the weekend will be rescheduled
- Australia Commodity Prices for April 2025: -6.1% y/y (-5.0% y/y forecast; -6.5% y/y previous)
- Swiss Retail Sales for March 2025: 0.6% m/m (0.3% m/m forecast; -0.7% m/m previous); 2.2% y/y (1.7% y/y forecast; 1.6% y/y previous)
- EU said to be preparing to present a plan to lower tariff and non-tariff barriers to the White House next week
- U.K. Mortgage Approvals for March 2025: 64.31k (64.0k forecast; 65.48k previous)
- U.K. BoE Consumer Credit for March 2025: 0.88B (1.4B forecast; 1.36B previous)
- U.K. S&P Global Manufacturing PMI Final for April 2025: 45.4 (44.0 forecast; 44.9 previous)
- Trump reiterated secondary sanctions on countries buying oil from Iran
- U.S. Treasury Secretary Bessent noted that the latest GDP reading will likely be revised higher and that yields are suggesting the Fed should cut rates
- White House Economic Adviser Hassett says he’s hopeful for progress in China trade talks, suggesting that an update could be ready by the end of the day
- Trump also noted that things are moving on schedule with the tax bill based on update from Congressional leaders
- U.S. Challenger Job Cuts for April 2025: 105.44k (290.0k forecast; 275.24k previous)
- U.S. Initial Jobless Claims for April 26, 2025: 241.0k (225.0k forecast; 222.0k previous)
- Canada S&P Global Manufacturing PMI for April 2025: 45.3 (46.0 forecast; 46.3 previous)
- U.S. ISM Manufacturing PMI for April 2025: 48.7 (47.2 forecast; 49.0 previous); Prices: 69.8 (70.0 forecast; 69.4 previous); Employment: 46.5 (44.1 forecast; 44.7 previous)
- U.S. S&P Global Manufacturing PMI Final for April 2025: 50.2 (50.7 forecast; 50.2 previous)
- U.S. Construction Spending for March 2025: -0.5% m/m (0.3% m/m forecast; 0.7% m/m previous)
- Apple and Amazon beat earnings expectations but issued guidance highlighting risks from trade policies
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Consolidation was the name of the game for most asset classes early in the day, as Chinese and European markets were closed for the Labor Day holiday. Risk-on vibes from the previous trading session extended their stay, keeping U.S. equity futures in the green during the Asian and London sessions.
Gold, on the other hand, shed more of its safe-haven gains after U.S. President Trump talked about having good chances that they will reach a trade deal with China during his speech to mark the first 100 days in office. The precious metal sustained losses for the rest of the day, closing 1.57% in the red.
Crude oil also took a nasty hit likely due to the combination of the OPEC+ May production increase, Saudi Arabia’s price war threats, and calls for additional output hikes for June. Later on, the energy commodity staged a strong rebound thanks to reports that the U.S.-Iran talks scheduled for the weekend were postponed while Trump reiterated secondary sanctions on countries buying oil from Iran.
Treasury yields, which had been cruising lower during the London session on Treasury Secretary Bessent’s remarks about the Fed needing to cut rates, got a boost from net positive U.S. data, particularly the ISM manufacturing PMI which revealed a slight uptick in the jobs component.
U.S. equity indices also drew support from Treasury Secretary Bessent’s commentary on how the Q1 GDP reading will likely be revised higher, along with Trump’s confirmation that things are “moving on schedule” with the tax bill and White House Economic Adviser Hassett’s suggestion that a trade deal with China could be struck soon.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Majority of dollar pairs moved in sync throughout the day, with the exception of USD/JPY that got pushed around by the Bank of Japan’s policy decision and press conference.
Although the central bank kept interest rates unchanged as expected, market participants noted the downward revisions to growth estimates and the lack of hawkishness as potential reasons for a longer tightening pause.
Weaker than expected Japanese consumer confidence data didn’t do the yen any favors either, keeping JPY on the back foot for the succeeding trading sessions and bringing USD/JPY up 1.64% for the day.
Stronger than expected Australian goods trade balance figures and talks of a potential U.S. trade deal with China led to some gains for AUD and NZD early in the day, but these were soon reversed as dollar strength came in play after net positive U.S. data.
The Challenger job cuts report reflected significantly lower layoffs for April while the stronger than expected ISM manufacturing PMI also indicated an improvement in the jobs component, leading dollar traders to adjust positions ahead of today’s U.S. NFP release. By session’s end, the Greenback closed higher across the board.
Upcoming Potential Catalysts on the Economic Calendar:
- Swiss procure.ch Manufacturing PMI at 7:30 am GMT
- Germany HCOB Manufacturing PMI Final at 7:55 am GMT
- Euro area HCOB Manufacturing PMI Final at 8:00 am GMT
- Euro area CPI Flash at 9:00 am GMT
- Euro area Unemployment Rate at 9:00 am GMT
- U.S. Non-Farm Payrolls Report at 12:30 pm GMT
- U.S. Factory Orders at 2:00 pm GMT
The market spotlight is likely to be on the U.S. non-farm payrolls report for April since there’s not much on the economic docket apart from the flash CPI readings from the eurozone.
Look out for another round of U.S. data misses that could keep traders wary of further Fed easing, along with trade-related headlines that could strongly impact overall risk sentiment.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!