Today’s economic calendar is packed, with the main focus on Flash PMI data for Australia, Japan, the EU, the UK, and the US. Asia-Pacific session includes New Zealand’s trade data alongside PMI data for Australia and Japan. The recent RBA meeting and possible BoJ rate hikes make the PMI data particularly engaging.
EU Session Focus
For the EU session, Germany and France’s Flash PMI data will be available, quickly followed by UK data. It is useful to note potential stark contrasts between EU and UK data, which might cause short-term volatility in currency pairs like EURGBP.
The US session will begin with the latest claims data, followed by the Philly Fed business index. The Flash PMI data for the US will be closely watched thereafter. Markets may be cautious before reacting to US data ahead of Jackson Hole, but following recent NFP revisions, any large increase in claims data will be scrutinised for its implications.
We are watching today’s US data carefully, but the real focus is the upcoming Jackson Hole symposium. After last month’s non-farm payrolls were revised down from 210k to 165k, any spike in today’s weekly jobless claims above the 240,000 mark could signal the labor market is finally weakening. This uncertainty makes options that bet on rising volatility, like VIX futures, look more appealing.
The flash US PMI data is also critical, especially since the latest CPI reading came in at a sticky 3.4%, slightly above what was expected. We’ll be looking to see if the services sector, which has been holding above a reading of 54.0 for the past quarter, shows any signs of cooling off. A strong services print could force markets to price in a more aggressive tone from the Fed, potentially impacting short-term interest rate futures.
Global Economic Divergence
Across the Atlantic, we are looking for signs of a growing split between the UK and Eurozone economies. With UK inflation proving more stubborn at 2.8% versus the Eurozone’s 2.2%, a weak German manufacturing PMI could increase bets that the ECB will pause its rate hikes before the Bank of England does. This divergence could present opportunities in EUR/GBP options, particularly for strategies that profit if the pair moves lower.
In Asia, the flash PMI from Japan is a key data point for anyone trading the yen. We have seen heavy speculation that the Bank of Japan is preparing to finally move away from its ultra-loose policy, especially after USD/JPY tested the 155 level again this past summer in 2025. A strong PMI reading today could lead to a sharp move in yen futures as markets increase the probability of a policy change.
Similarly, Australia’s PMI will be watched to see if the RBA needs to consider another hike to combat their own domestic inflation challenges. Given all the global uncertainty, we believe major market reactions to today’s data may be short-lived as most traders will wait for clarity from central bankers next week. This suggests using options to define risk might be a better strategy than taking large, outright directional bets right now.
