Profit-taking was the name of the game on Thursday as the major assets reversed their intraweek trends ahead of Powell’s keynote speech on Friday.

Spot gold and the S&P 500 index continued to trade lower near their record high levels, while U.S. bond yields and the U.S. dollar saw recoveries despite mixed U.S. data releases.

Which themes dominated the markets and how did your favorite assets trade?

Headlines:

• Judo Bank Flash Australia manufacturing PMI rose from 47.5 to a three-month high of 48.7 in August; Services PMI jumped from 50.4 to a three-month high of 52.2
• au Jibun Bank Flash Japan manufacturing PMI up from 49.1 to 49.5 in August; Employment growth slowed; Selling price inflation fell to its lowest since November
• HCOB Flash France manufacturing PMI fell from 44.0 to an eight-month low of 42.1 in August; Services PMI jumped from 50.1 to a 27-month high of 55.0
• HCOB Flash Germany manufacturing PMI dipped from 43.2 to a five-month low of 42.1 in August; Services PMI expanded at a softer pace, down from 52.5 to 51.4
• HCOB Flash Eurozone manufacturing PMI dipped from 45.8 to an eight-month low of 45.6 in August; Services PMI shot up from 51.9 to a four-month high of 53.3
• S&P Global U.K. PMIs showed solid private sector expansion in August
• ECB meeting minutes noted September as a “good time to re-evaluate” monetary policies with an “open mind”
• U.S. initial jobless claims in the week ending August 17: 232K as expected (228K previous)
• S&P Global Flash U.S. manufacturing PMI dropped from 49.6 to an eight-month low of 48.0 in August; Services PMI improved from 55.0 to a two-month high of 55.2
• U.S. existing home sales for July: 3.95M (3.94M expected, 3.90M previous)
• New Zealand retail sales for Q2 2024: -1.2% q/q (-1.0% expected, 0.4% previous); Core retail sales at -1.0% q/q (-0.8% expected, 0.3% previous)
• U.K. GfK consumer confidence remained at -13 (-12 expected) in August as confidence improved but economic expectations slipped for the first time since February
• Japan national core CPI accelerated from 2.6% y/y to 2.7% y/y as expected in July

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

The FOMC meeting minutes hinting at a possible rate cut in September didn’t exactly give bitcoin (BTC/USD) or crude oil prices a boost on Thursday morning. Bitcoin struggled after hitting a technical resistance level, while crude oil continued its slide from the previous session.

Most other major assets stayed pretty calm early in the day, with global PMI reports being the main focus. The data was a mixed bag, but outside of the U.K.’s release, it didn’t move the needle much for major markets.

U.S. 10-year bond yields started climbing during the early European session, likely because investors were shying away from U.S. bonds ahead of Powell’s big speech on Friday.

The cautious mood carried over into the U.S. session, where the data was also a mixed bag. Initial jobless claims came in higher than expected, but the U.S. services PMI surprised to the upside. All in all, the labor market seems to be cooling off, but it’s still hot enough to keep the Fed on its toes.

Bitcoin dropped to $60,200, the S&P 500 took a sharp turn lower after approaching its mid-July highs, and gold extended its pullback after hitting new record highs earlier this week. WTI crude oil bucked the trend, jumping from $71.60 to $73.45, possibly on short covering and optimism around a Fed rate cut.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Major Currencies Chart by TradingView

The U.S. dollar took a breather from its weekly losses, getting a lift from what looked like a round of profit-taking that boosted demand for the Greenback.

Asian session traders followed the lead from the previous U.S. session, pushing the dollar higher despite the release of dovish FOMC meeting minutes. However, as the European session approached, the dollar gave back some gains as traders waited for the European PMI reports.

As expected, France’s private sector PMIs got a boost from the Paris Summer Olympics. Meanwhile, Germany’s PMIs came in much weaker than anticipated, but chatter that the European Central Bank’s (ECB) rate cut was already baked in helped limit the euro’s losses after the reports.

The focus then shifted to U.S. data during the U.S. session. The weekly initial jobless claims came in higher than expected, but new home sales improved, and the S&P Global Services PMI showed faster-than-expected expansion.

With Uncle Sam’s labor market looking relatively strong, speculation grew that Powell might deliver a hawkish speech on Friday. This speculation, combined with the profit-taking environment, helped push the Greenback to close the day above its opening levels.

Upcoming Potential Catalysts on the Economic Calendar:

• BOJ Gov. Ueda to give a speech at 4:00 am GMT
• FOMC member Raphael Bostic to give a speech at 12:00 pm GMT
• Canada retail sales at 12:30 pm GMT
• Canada quarterly corporate profits at 12:30 pm GMT
• Fed Chairman Powell to give his Jackson Hole keynote speech at 2:00 pm GMT
• U.S. new home sales at 2:00 pm GMT
• BOE Gov. Andrew Bailey to give a speech at 3:00 pm GMT
• FOMC member Austan Goolsbee to give speeches at 4:30 pm, 5:45 pm, and 6:15 pm GMT

Central bankers will take center stage as the Jackson Hole symposium heats up. JPow’s keynote speech will be the main draw, though speeches by BOE Gov. Bailey and FOMC members Bostic and Goolsbee could also inspire repricings of interest rate biases.

Meanwhile, Canada will drop its June retail sales data where we could see slightly slower decreases in retail activity compared to May.

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