Dollar bulls hold steady ahead of ISM non-manufacturing PMI
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Dollar bulls hold steady ahead of ISM non-manufacturing PMI

Tuesday is expected to be another day of little change for European stock markets after the previous session's sharp losses caused the markets to stabilize. Despite this, investors remain on high alert regarding recession risks, as a report released earlier today revealed that German factory orders fell an estimated 1.1% in July, which was in line with the contraction seen last month and a further indication that the largest economy of the eurozone is slowing down.

US dollar

After sweeping gains, the dollar took a breather on Tuesday. However, it still hit a fresh 24-year high against the rate-sensitive Japanese yen as monetary policy tightening picks up and the gap with Japan's low-interest rates widens. The greenback, however, eased slightly from milestone highs on the euro and sterling, despite recession fears and a gas crisis keeping both currencies from trending higher.

Australian dollar

The Australian dollar trimmed some gains after the RBA raised its cash target rate by 50 basis points to 2.35% - its highest level since 2014. Today's hike is the bank's fifth raise so far this year. 

While the RBA's annual inflation target is 2% to 3%, headline inflation is at 6.1%, its highest level in nearly 30 years. Consumer sentiment and spending have both been severely affected by this. 


The Organization of Petroleum Exporting Countries and its allies, led by Russia, agreed to cut output by 100,000 barrels per day in October. Top producers Saudi Arabia and other members voiced concern over a slump in prices since June despite tight supply. While the level of reverse may not seem to have a significant impact on the market, the OPEC+ move signals that it is keeping a close eye on demand and is managing supply to keep oil prices in check.

Events of the day

Investors will be cautiously awaiting the construction PMI in the UK and the non-manufacturing PMI in the US, which are expected to indicate yet another slowdown in business activity. In the UK, the construction PMI is forecast to plunge even further from 48.9 to 48 in August after falling into the contraction zone in July. There will be a decline in the construction PMI for the sixth month in a row. 

ISM will release non-manufacturing PMI for August, and it is expected that it will also decline from 56.7 to 55.1 after featuring a better-than-expected print in July.