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All Eyes on US Manufacturing Activity

Can The Preliminary Manufacturing PMI Ward Off August Weakness?

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Friday’s most important upcoming data point is the preliminary September manufacturing PMI, scheduled for release later in the session. Amid the backdrop of weakness in August, economists would be eager to know if last month’s weaker than expected numbers were a blip, or is manufacturing in the early phases of a slowdown.

Focus on Fundamentals, As Nasdaq Reaches New Record


With the Federal Reserve opting to keep interest rates unchanged earlier this week, financial markets are now turning their attention to whether a December rate hike is set to materialize. For that to happen, the economy has to not only sustain recent optimism but also continue improving, especially with respect to manufacturing and industrial production. With manufacturing data continuing to be at mixed at best, September needs to experience a reversal from August’s weakness to boost policymakers’ confidence.  After factory production fell in August, manufacturing will be a key component of any enduring recovery, making it an especially important point for Fed officials.  However, in the meantime, the main benefactor of the Fed’s decision has been stocks, with the tech-heavy NASDAQ Composite rallying to a new all-time high during Thursday trading. nt

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Existing Home Sales Tepid; Jobless Claims Fall


Existing home sales in the US fell by more than forecast August, sliding -0.90% to a seasonally adjusted annual pace of 5.3 million. Sales dipped across the country as low inventories failed to keep prices in check, the National Association of Realtors said in a statement yesterday.  This echoes recent weakness in other housing indicators like building permits and housing starts, suggesting more fundamental weakness.  Aside from the housing sector, initial jobless claims for the week ended September 16 fell by 8000 to 252,000, according to data from the U.S. Department of Labor hitting 43-year lows. This was the 81st consecutive week of claims not totaling more than 300,000. Notably, last week also coincided with the review period for the more important monthly jobs report. As such, the latest drop in jobless claims bodes well for the September payroll figure set for release early next month.

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Crude Volatile Ahead of OPEC Output Freeze Talks


OPEC members and Russia will hold talks on the sidelines of the International Energy Forum on September 28 in Algeria to explore the possibility of a freeze on production around current levels. However, market watchers warn that the summit could fail just like the one in Doha earlier this year, as member states haggle to defend their own production and market share. As was the case ahead of the Doha meet, conflicting comments from major producers have increased crude price volatility, with large intraday swings in either direction becoming common ever since OPEC made public its plans for talks in August.  Prices fell in early Friday trade amid caution that the Algeria gathering may turn out to be a nonevent. Traders also attributed the declines to a bout of profit taking following two straight days of strong gains.

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Chinese Business Sentiment Improves


Chinese business sentiment improved in September as manufacturers’ seemed confident on the back of strong new orders. The Deutsche Börse Group-compiled MNI China Business Sentiment Index for this month came it at 55.8, up from the revised 54.1 in August. This is the highest reading in the index since August 2015. Firms also seemed more upbeat about the future, with the Indicator of Future Expectations managing to hold well above last month’s reading.  One of the main reasons behind this rebound is the devaluation that has occurred, with the People’s Bank of China taking a number of steps both directly and indirectly to reduce the strength of the Yuan.  However, after a year of declines, Premier Li Keqiang mentioned Yuan stability earlier in the week, echoing comments earlier in the year when he pledged similar stability before the currency fell dramatically versus the US dollar.

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Upcoming Events

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  • 09:00 GMT
  • EUR
  • Manufacturing PMI (Preliminary September)
  • 51.5
  • 51.7
  • 09:00 GMT
  • EUR
  • Services PMI (Preliminary September)
  • 13:30 GMT
  • CAD
  • Core CPI (MoM)
  • 0.20%
  • 0.00%
  • 13:30 GMT
  • CAD
  • Core CPI (YoY)
  • 2.00%
  • 2.10%
  • 13:30 GMT
  • CAD
  • CPI (MoM)
  • 0.10%
  • -0.20%
  • 13:30 GMT
  • CAD
  • CPI (YoY)
  • 1.40%
  • 1.30%
  • 13:30 GMT
  • CAD
  • Core Retail Sales (MoM)
  • 0.50%
  • -0.80%
  • 13:30 GMT
  • CAD
  • Retail Sales (MoM)
  • 0.10%
  • -0.10%
  • 14:45 GMT
  • USD
  • Manufacturing PMI (Preliminary September)
  • 51.9
  • 52.0