The German manufacturing PMI has been below 50 for at least two years, with no signs of improving whatsoever. Yesterday, Volkswagen announced factory closures in Germany to secure bigger cost cuts – the first factory closure in the iconic company’s 87-year history. It’s sad, isn’t it? Well not for investors. Volkswagen shares jumped more than 1% in Germany yesterday, the DAX and the Stoxx 600 index consolidated near their ATH levels. The EURUSD rebounded, probably helped by a softer US dollar across the board and some cautious and less dovish comments from some European Central Bank (ECB) members last week. But the single currency is under pressure this morning on a broadly stronger US dollar. Cable retreats and the franc is softer against the US dollar as well, before the release of growth and inflation figures this morning. The Canadian dollar is also offered against the greenback as the Bank of Canada (BoC) is expected lower its policy rate by 25bp when it meets on Wednesday this week.

Today, the US will return from its long weekend and we could start seeing some action in the markets. It felt yesterday that the absence of the American markets revived the worries that we might see a rebound in US jobs figures this week – a scenario which would derail the Federal Reserve (Fed) doves, reshuffle the Fed cut expectations and give way to a potentially sizeable price action across different asset classes. Hiring and wage growth may have accelerated in August, for example, if that’s the case, the 50bp cut rates from the Fed will simply fall off the bus. And stronger-than-expected figures should, in the first place, let the US dollar recover a part of the recent losses, throw a floor under the US yields, disappoint indices and sectors that rely on rate cuts but give support to others – like the tech – who don’t really need the support of the Fed to do well. The jobs data will start flowing in from tomorrow, but investors will have a look at the final ISM figures today.

Gold consolidates a touch below the $2500 per ounce, and US crude struggles near the low range of summer trading. Besides the unideal European manufacturing figures, the week started with soft numbers from China, well. It’s almost impossible to cheer up the Chinese investors – whereas there were times – in the past – where soft data would revive the intervention bets and serve as a step to rebound. And today, even with the news that the Chinese government will put relatively big sums on the table to help the Chinese factories and housing sector rebound, there is not much enthusiasm.

And you can see the lack of enthusiasm in iron ore futures that dived to the lowest levels since November 2022. Copper futures also retreated at the start of this week. Down in Australia, which is one of China’s biggest trading partners and where the economy relies on export of commodities like iron ore, the AUDUSD is under a renewed pressure as all eyes are on the Q2 GDP figures due tomorrow. The Australian economy grew by a mere 0.1% in Q1, and while expectations for Q2 are slightly better, the challenges are far from over. Sluggish China, inflation, coupled with rising consumer debt, are keeping the Reserve Bank of Australia (RBA) on its toes as they prepare for their next policy meeting. The RBA is not as explicitly supportive of the doves, that’s also why we have seen the Aussie perform better across a broadly slashed US dollar. But China’s misery will likely keep the upside potential limited near the 70 cents mark.

And speaking of enthusiasm or the lack thereof, September is blamed to be a bad month for both equities and credit. And at the historically high levels, with a decent level of uncertainty regarding what the Fed should (and what the Fed will) do, the geopolitical tensions, war, energy crisis and so, there is little to make this September better than the others.