Nomura stays brief USD into Jackson Gap

The softer NFP and CPI knowledge have bolstered their conviction that the Fed is again on the trail to slicing, with a 25bp transfer in September nonetheless their base case. The stronger July PPI was solely a short lived hiccup and isn’t seen as a game-changer.

Positioning doesn’t look crowded, which suggests there’s nonetheless room for the greenback to fall if Powell leans dovish at Jackson Gap or if incoming knowledge keep on the weaker facet. The dangers to this view are stronger-than-expected August knowledge, a revival of overseas inflows into US belongings, or renewed China weak spot that enhances USD safe-haven demand.

Occasion-wise, at Jackson Gap if Powell nods to a softer labor market, the greenback most likely weakens additional; if not, markets will await September’s NFP and CPI earlier than making the following huge transfer.

Total bias: Nonetheless brief USD, however with occasion and knowledge dangers that might simply swing sentiment within the brief time period.

This text was written by Arno V Venter at investinglive.com.