USD

After posting its first winning month since May, the US Dollar is in the red this morning as markets react to the latest US jobs data. With this news, the Greenback remains on pace for its first losing week since mid-July.

In August, the US economy added 187K jobs, surpassing expectations but marking the third consecutive month with job gains below 200K. Notable job growth was observed in sectors like healthcare, leisure and hospitality, and construction, while employment in transportation and warehousing fell. Meanwhile, the unemployment rate in the US increased to 3.8%, the highest since February 2022, while the underemployment rate rose to 7.1% from 6.7% in June.

Later this morning, August's ISM Manufacturing PMI is slated for release at 10:00 AM EST and is expected to rise slightly to 47 after coming in at 76.4 in July.

EUR

The Euro is up 0.2% on the day, fresh off yesterday's 0.7% selloff against the Greenback, its steepest daily loss since July 27, en route to its first losing month since May.

On the data front, the Eurozone manufacturing PMI increased to 43.5 in August, but it still indicated a sharp decline in the sector led by falling new orders and employment. France's manufacturing PMI remained at 46, showing a seventh consecutive month of contraction, while Germany's PMI stayed at 39.1, reflecting a substantial decline in output and new orders. Spain and Italy's manufacturing sectors also remained in contraction territory.

Also in Italy, Italian GDP contracted by 0.4% in Q2, revised from the initial estimate of a 0.3% contraction, while industrial producer prices fell by a record 10.2% year-on-year in July.

GBP

The Pound is back in the green today as traders analyze this morning's UK manufacturing and housing data while digesting the US nonfarm payrolls report.

The UK's manufacturing PMI for August was revised to 43.0 from the preliminary estimate of 42.5. Nevertheless, it remained the lowest since May 2020, indicating significant weakness in the sector, with steep declines in output, new orders, and staffing levels. However, purchasing costs fell notably, and business confidence improved to a four-month high.

Meanwhile, the UK's Nationwide House Price Index saw a significant annualized decline of 5.3% in August, marking the largest drop in house prices since July 2009, driven by higher borrowing costs and decreased market activity.

JPY

The Japanese Yen is rallying this morning and on pace for its first winning week against the Dollar in a month after the latest look at Japan's manufacturing sector health.

Japan's au Jibun Bank Manufacturing PMI for August was revised slightly downward to 49.6, signaling a third consecutive month of declining activity with moderate reductions seen in output and new orders, while employment growth came in at the slowest in 29 months. In addition, business sentiment reached its lowest point since February.

In a separate report, Japanese companies increased investment in plant and equipment by 4.5% in Q2, with business-oriented machinery and fabricated metal products seeing the most significant growth.

CAD

The Loonie is down by around 0.2% today after the release of the latest Canadian GDP and US jobs data. With these recent movements, the Loonie is on track for its first weekly gain against the Greenback since mid-July.

Canada's real GDP stagnated in Q2 following a 0.6% rise in Q1, missing expectations for a 0.3% increase. Declines in housing investment, reduced inventory accumulation, and slower exports and household spending all weighed on GDP. From an annual perspective, the economy contracted by 0.2%, significantly below expectations of a 1.2% expansion.

Coming up at 9:45 AM, Canada's S&P Global Manufacturing PMI reading for August is on the horizon. Markets anticipate a slight decline to 49.2 after it came in at 49.6 in July.

MXN

After yesterday's major selloff that saw the currency shed over 1.7%, the Mexican Peso is slightly higher today as traders continue to evaluate the news that Mexico's Central Bank will phase out its currency hedging program.

Banxico announced a gradual reduction of its FX hedging program, initially implemented in 2017 and expanded in 2020. The Bank cited improved operating conditions in the FX market as one of the reasons for the decision. However, this move is seen as a way for Banxico to capitalize on the Peso's strength and regain exchange rate flexibility.

On the data front, MXN traders are awaiting Mexico's latest manufacturing PMI reading, set for release at 11:00 AM EST today.

BRL

The Brazilian Real is up by over 0.8% today, although it is still on track to close the week in the red, following Brazil's robust Q2 GDP report this morning. The Brazilian Real closed August down nearly 5% against the Dollar, marking its worst month since June 2022.

Brazil's GDP grew by 0.9% in Q2, following a 1.8% expansion in Q1, surpassing expectations of just a 0.3% increase. The solid Q2 performance was driven by strong demand for commodity exports and resilient household consumption despite the country's high interest rates. On the trade front, exports increased by 2.9%, but imports rose by 4.5%. Finally, from a year-on-year perspective, the economy grew by 3.4%.

CNY

The Chinese Yuan is up by over 0.3% this morning after the People's Bank of China (PBOC) announced a cut in its FX reserve ratio and a stronger-than-expected manufacturing report out of China.

The PBOC is reducing the foreign exchange reserve requirement ratio to 4% from 6%, starting in September. This marks the first such reduction this year. The move aims to stabilize the Yuan and boost the economy by effectively releasing $16.4 billion in FX reserves and reducing Dollar funding costs, making it more attractive to borrow US Dollars rather than purchasing them with Yuan in the spot market.

Meanwhile, China's manufacturing activity showed robust growth in August, with the Caixin Manufacturing PMI rising to 51.0 from 49.2 in July, driven by improvements in production, orders, and employment.