Welcome to this week’s Wednesday London Session Brief.
The trading week begins with investors focused on a significant run of US economic data, including Non-Farm Payrolls (NFP), JOLTS job openings, ISM Manufacturing, and PCE inflation. While the US dollar has strengthened in recent weeks following a hawkish repricing of Federal Reserve expectations, momentum appears to be slowing, creating the potential for tactical counter-trend opportunities. Meanwhile, equity markets continue to benefit from supportive seasonality, subdued volatility, and persistent dip-buying interest.
Market Analysis
This week’s macro backdrop is dominated by high-impact US economic releases, with Friday’s Non-Farm Payrolls report representing the key event risk. After an extended period of dollar appreciation driven by expectations of a more hawkish Federal Reserve, markets are beginning to assess whether further gains can be sustained without additional evidence supporting tighter monetary policy.
Although the broader dollar trend remains constructive, near-term price action appears less directional. This could allow for periods of short-term dollar weakness before the prevailing trend potentially resumes.
Risk sentiment across equity markets also remains broadly constructive despite ongoing geopolitical developments.
Key themes shaping today’s outlook include:
Non-Farm Payrolls, JOLTS, ISM Manufacturing, and PCE inflation dominate the macro calendar.
The US dollar enters the week showing signs of indecision following its recent rally.
Lower market volatility continues to provide a supportive backdrop for risk assets.
Expectations of a resilient US labour market continue to underpin equity sentiment.