Errante’s The Week Ahead: 1^st – 5^th September 2025

Highlights of the Week

• Eurozone Inflation Steady? Flash CPI data expected to hold near 2.0% YoY; any upside in services inflation could challenge ECB’s pause narrative and lift the euro.
• US Activity & Price Signals: ISM manufacturing and services PMIs to show whether growth stabilization is real, with price sub-indices key for gauging inflation stickiness.
• Labor Market in Focus: Nonfarm Payrolls, wages, and unemployment will set the stage for the Fed’s September meeting, likely tipping the balance on whether a rate cut is delivered.

What Now

Eurozone CPI (Tue 12:00, headline YoY)

Headline inflation has flat-lined near 2.0% YoY for months as energy base effects fade. The stickiness is in services, where wage-sensitive components have eased only gradually. Goods disinflation has largely run its course.

With growth soft and inflation around target, the ECB can stay patient; the bar for re-tightening is high. Markets will focus on any uptick in core/services as a risk to the “wait-and-see” stance.

FX read-through:

Base case (steady 2.0% / benign core): Mildly EUR-supportive vs USD as it keeps the ECB comfortable and leaves the dollar to trade the US data.

Upside surprise (services re-accel): Front-end EUR rates push up; EUR outperforms JPY & CHF, and EURUSD probes 1.18+.

Downside miss: Re-pricing of ECB cuts later in the year; EUR underperforms GBP and USD, particularly if US data firm later in the week.

2) US PMIs (Tue ISM Mfg; Thu ISM Services + Prices)

Manufacturing has hovered below 50 (contraction) even as S&P Global looks better; ISM Prices for both manufacturing and services have run hot (mid-60s/upper-60s), flagging sticky input costs. Services activity has been the growth anchor just above 50.

If activity stabilizes while price indices stay elevated, the Fed gets a muddier picture—growth OK but inflation impulse not fully benign.

FX read-through:

Base case (mfg ~48–49, services ~50–51, prices firm): Two-way USD, with USD stronger vs cyclicals (AUD/NZD/CAD) on growth caution, but softer vs EUR/JPY if rate-cut odds for September stay high.

Soft surprise (activity slips, prices cool): September cut odds jump; DXY fades, gold catches a bid, USDJPY drifts lower on UST yield compression.

Hot surprise (activity rebounds, prices jump): Markets pare cut odds; USD pops, EURUSD capped, gold wobbles, equities rotate defensively.

3) US Labor Pulse into NFP (Fri 15:30)

Payroll growth has cooled (consensus +78k) and unemployment has crept up. Hiring intentions (JOLTS) are lower, and ADP prints have been modest. Wages are running ~0.3% MoM, a pace consistent with gradual disinflation if sustained.

The Fed has signaled it’s watching downside labor risks—another soft headline with tame wages materially raises the probability of a September cut.

FX map:

Base case (sub-100k, UR 4.3%, AHE 0.3%): USD lower on balance; EURUSD > 1.17/1.18, USDJPY toward 146–147 on yields, gold firmer as real rates slip.

Stronger surprise (≥150k or AHE ≥0.4%): Cut odds fade; USD broad bounce, EURUSD retreats, USDJPY resilient, gold softer.

Weak shock (<50k, UR up, AHE 0.2%): Cut almost assumed; USD slides, risk initially up on easing hopes but cyclical FX mixed (growth scare). Gold outperforms.

Putting it together

• Most probable sequencing: Euro CPI steady → mixed US PMIs (prices sticky, activity uneven) → softish NFP. That combination tilts the path of least resistance to a weaker USD, higher gold, and EUR support on dips.
• Cross-asset guardrails: If ISM Prices stay buoyant and NFP beats, the market quickly pivots back to “one-and-done” or “later cut,” lifting the dollar—especially vs AUD/NZD—and capping gold/indices.
• Positioning bias: Favor EURUSD buy-the-dip, USDJPY rallies to fade into 147–148 if yields ease, keep gold dips to 3,370–3,400 (spot) on watch with tight risk. Keep cyclical FX exposure light until PMIs/NFP clarify the growth impulse.

Market Events and Announcements (GMT+3)

Sunday, 31^st August 31 2025

• 04:30 – CNY – Manufacturing PMI (Aug) (Forecast: 49.5 | Previous: 49.3)

Monday, 1^st September 2025

• United States & Canada – Labor Day (Holiday)

Tuesday, 2^nd September 2025

• 12:00 – EUR – CPI (YoY) (Aug) (Forecast: 2.0% | Previous: 2.0%)
• 16:45 – USD – S&P Global Manufacturing PMI (Aug) (Forecast: 53.3 | Previous: 53.3)
• 17:00 – USD – ISM Manufacturing PMI (Aug) (Forecast: 48.6 | Previous: 48.0)
• 17:00 – USD – ISM Manufacturing Prices (Aug) (Previous: 64.8)

Wednesday, 3^rd September 2025

• 17:00 – USD – JOLTS Job Openings (Jul) (Previous: 7.437M)

Thursday, 4^th September 2025

• 15:15 – USD – ADP Nonfarm Employment Change (Aug) (Forecast: 104K)
• 15:30 – USD – Initial Jobless Claims (Previous: 229K)
• 16:45 – USD – S&P Global Services PMI (Aug) (Forecast: 55.4 | Previous: 55.7)
• 17:00 – USD – ISM Non-Manufacturing PMI (Aug) (Forecast: 50.5 | Previous: 50.1)
• 17:00 – USD – ISM Non-Manufacturing Prices (Aug) (Previous: 69.9)

Friday, 5^th September 2025

• 15:30 – USD – Average Hourly Earnings (MoM) (Aug) (Forecast: 0.3% | Previous: 0.3%)
• 15:30 – USD – Nonfarm Payrolls (Aug) (Forecast: 78K | Previous: 73K)
• 15:30 – USD – Unemployment Rate (Aug) (Forecast: 4.3% | Previous: 4.2%)

Market Insights: Key Charts to Watch

EUR/GBP – Daily Chart

Current Market Trend & Momentum:

EUR/GBP has bounced from 0.8610 (61.8% Fib retracement), at the verge of its steeper uptrend line, and is trading near 0.8665, with momentum supported by RSI (~52) and OBV stabilizing. MACD is turning positive, suggesting scope for further upside.

Main Scenario (Bullish Bias):

If momentum holds above 0.8647, the pair could retest 0.8671 (100% Fib extension), with scope toward 0.8688 (127.2%) and 0.8710 (161.8%).

Key Levels:

• Support – 0.8647, 0.8610, 0.8550
• Resistance – 0.8671, 0.8688, 0.8710

Alternative Scenario:

Failure to hold 0.8647 would expose 0.8610 and renew pressure toward 0.8550.

XAU/USD (Gold) – Daily Chart

Current Market Trend & Momentum:

Gold is consolidating around $3,418 after a breakout attempt from a multi-month triangle. RSI (~61) is supportive, while rising OBV and strong volume suggest accumulation ahead of key macro releases.

Main Scenario (Bullish Bias):

A sustained move above $3,408 (100% Fib extension) could extend gains toward $3,435 (127.2%) and $3,469 (161.8%).

Key Levels:

• Support – $3,372, $3,311
• Resistance – $3,408, $3,435, $3,469

Alternative Scenario:

A reversal below $3,372 would neutralize the bullish setup, exposing $3,311 as the next downside target.

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