In the middle of last week, the market was dominated by optimism associated with the change in President Trump's rhetoric regarding negotiations with Canada. It was extrapolated also to the approach to other trading partners. A few days passed and nothing was left of the enthusiasm of the markets. In the currency markets, with moods changing very rapidly, investors will probably prefer a game to extinguish larger movements within the ranges of fluctuations.
This week there will be key data in the discussion surrounding the future of trade wars. The new round of tariffs imposed by the US on Chinese goods may worsen sentiment in the markets. In addition, PMI / ISM indicators will be used to assess the condition of the global economy. Traditionally, at the beginning of the month, we have a report on the US labor market. Meetings will be held by central banks in Australia, Poland, Canada and Sweden.
The US markets are starting the week with a delay due to Labor Day on Monday. In the foreground, there may be a discussion about the chances of implementing new import duties for goods from China. The list of goods will serve as a card at the negotiating table rather quickly, although the risk of its implementation may be a factor spoiling the market sentiment and pushing the capital towards USD and other safe havens (JPY, CHF). From the data side, the global investors will get familiar with the ISM and NFP data. ISM indicators may indicate deterioration in relation to the previous month, but readings at 56-57 still inform about the strong condition of the economy. The labor market should again show strong values with high employment growth (180 000 thresholds) and a decline in the unemployment rate to 3.8%. The wage increase close to the trend is 0.2-0.3%. will seal the Fed's interest rate hike in September. In the Eurozone, the revision of PMI will rather go unnoticed, confirming that the period of a slowdown has already passed, but there are no strong signs of rebound. As business activity research translates into hard data, you can say more in German industrial production data is scheduled for Friday. Good data seems to be a prerequisite for breaking EUR higher, otherwise we will continue to observe boring consolidation.
Let's now take a look at the S&P500 technical picture at the H4 time frame before the market is open and the data released. The price has tested the technical support at the level of 289.37 and bounced higher, but no new all-time high was made yet. Nevertheless, there is still an unfilled gap between the levels of 287.63 - 288.62, so the market might try to fill it if the data will be worse than expected. The nearest resistance for the price is seen at the level of 291.70, which is the all-time high at this market. The longer-term trend remains bullish.
