Dollar wavers ahead of SLOOS

• Eurozone Q2 GDP returned to growth with a 0.3% advance reading (prior revised higher to 0.0%).
• Eurozone core inflation held steady at 5.3%
• Stocks have a flat session as traders await NFP Friday

US stocks are wavering ahead of a key Fed survey that should show loan growth is weakening and that the economy should steadily weaken.  The Senior Loan Officer Opinion Survey (SLOOS) will tell us how top lending officers feel about the credit outlook.

The US dollar isn’t making any major moves as Wall Street grows more confident that a soft landing is very much obtainable. 

Many traders won’t do much positioning until Friday’s NFP report, which should show the labor market remains tight.  The key for the payroll report might be what is happening with wages, as it seems fears of an acceleration of inflation have been downsized.  This week also includes the ISM reports which should show manufacturing activity is picking up and the service sector is cooling. 

Weakening growth prospects is not the takeaway from this earnings season, but that could change if Apple and Amazon’s results tell a different story. 

EUR/USD

The euro remains heavy as concerns grow for Germany’s outlook.  German economy minister warned of five tough years and that bleak outlook could weigh on the euro.  EUR/USD might start to form a narrow trading range but that could change once we get beyond the NFP report.  It seems everyone is in wait-and-see mode and right now the US jobs report will steal the spotlight.

The 1.0950 to 1.1050 could emerge as the key trading range until this week’s fireworks.

US Data

Both the ISM Chicago PMI and Dallas Manufacturing survey showed activity improved for a second consecutive month.  The Chicago PMI was softer-than-expected but has yet to benefit from increasing aircraft orders.  The Dallas Fed did not provide an inspiring outlook as activity remains sluggish, while prices paid and received rose.  The manufacturing part of the economy is still in contraction territory and the recovery will likely be unbalanced. 

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