The US dollar remained stable as markets dealt with rising geopolitical risks in the Middle East and awaited further US economic data.

The stability comes despite a general move towards safe-haven assets in foreign exchange markets, which has not resulted in a significant reduction in risk, HSBC noted in a note published on Wednesday.

Domestic factors in other countries have reduced the attractiveness of their currencies as unthreatening havens. For example, Japanese officials urged caution on interest rate increases, and the governor of the Bank of Japan highlighted continuing global economic uncertainty.

In Europe, the hawks of the European Central Bank (ECB) are noiseless, which is in line with market expectations of a potential interest rate cut in October. The ECB’s Kazaks acknowledged the likelihood of a rate cut given the clear economic risks, although they mentioned it was premature to say inflation was fully resolved.

Despite these dovish signals, the unemployment rate in the euro area remained stable at 6.4% in August. Market participants are currently awaiting guidance from the ECB’s Isabel Schnabel on whether it will defy dovish market expectations.

The Swiss National Bank (SNB) has expressed reluctance to allow the Swiss franc to strengthen, and fresh president Martin Schlegel has suggested the operate of interest rates and potential interventions in the currency market.

Schlegel also noted that the risks for Swiss inflation are more negative, which does not rule out negative interest rates. This stance could impact the franc’s role as a unthreatening haven, potentially making the US dollar or gold more attractive in times of increased risk aversion.

In the United States, there are mixed signals from the labor market – JOLTS data shows an enhance in the number of job offers, and the ISM survey for the manufacturing sector shows a decline in the employment component. The market is currently awaiting the publication of ADP private sector wage estimates, with the consensus pointing to an enhance of 125,000 in September.

This data, along with upcoming speeches by Federal Reserve officials, could influence expectations for the November meeting of the Federal Open Market Committee (FOMC), which fully included a 25 basis point rate cut, with a 40% chance of a 50 basis point cut. .

Finally, Moody’s (NYSE:) upgraded Brazil’s sovereign rating outlook to Ba1, one notch below investment grade, while maintaining a positive outlook. This reflects Brazil’s forceful economic growth and structural reforms, including upcoming tax reform, which could contribute to long-term economic growth. Despite acknowledging fiscal challenges, Moody’s expects Brazil’s public debt to stabilize at around 82% of GDP over the medium term. This update could contribute to a decline in the USD-BRL rate, in line with Moody’s year-end target.

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