Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
CHIA SẺ
Wall Street received quite the surprise last Friday in the form of a bombshell NFP report, which indicated a whopping 162,000 new jobs added to the US economy in August, demolishing expectations of just 56,000. Beyond the headline figure, revisions to the June and July figures swelled prior estimates by a combined 55,000 jobs. There was more solid news to be found on the joblessness side, where the headline unemployment rate remained steady at 4.1%, but more importantly the broader U-6 rate dropped from 8% to 7.7%. The labour force participation rate also ticked up slightly to 61.6%, meaning the fall in unemployment is not simply due to people giving up on finding work. All-in-all, the report was unusually strong, so much so that the implied odds of a rate hike next week have moderately increased from 50% to around 60%, while bond yields finished the session noticeably higher.
For all the movement behind the scenes, markets were unflustered by the report. The US dollar made marginal gains as currency markets digested the news, but the DXY remains somewhat off the 100 point threshold. US equities showed minor signs of weakness, as did precious metals, leaving gold and silver roughly 1% down by the end of the day. Bitcoin shied away from new highs but clung on to $80,000 per coin throughout the weekend and into this morning. Even oil prices have showed very little motivation in going anywhere over the last few sessions, with the Brent Crude benchmark stubbornly hovering around $96 per barrel but venturing no further towards three-figure territory. Everyone is waiting for the next catalyst to jolt markets into action; they may have to wait a little longer.
Traders can expect very thin order books going into today’s session due to Canadian and US stock exchanges being closed for Labour Day. Holidays aside, the economic calendar will not get spicy until much later in the week, starting with an interest rate decision from the European Central Bank on Thursday, which is expected to result in a 25-bps hike for the euro. Inflation is proving just as sticky in the common currency area, and some analysts are now predicting that the ECB will enact two rate hikes before the end of the year. In the first of two inflation readings on the US economy, Thursday will also see the publication of the August PPI figures, which are forecast to show a 0.3% increase in producer prices month-over-month. The bigger story of the week will arrive a day later with the release of the latest CPI data, which has been notoriously difficult to predict in recent months. A strong labour market coupled with high inflation will seal the deal for a rate hike next week, and the first condition has already been met. The latest UK GDP figures will also materialise on Friday, which may play into expectations for the Bank of England’s interest rate decision next week.
Friday’s US inflation reading will be the major event of the week, which may leave many traders sitting idle until the pivotal moment arrives, particularly with market closures affecting North American markets today. On the earnings front, Oracle (ORCL) is the only company of note, reporting after the bell on Thursday. The company is down 18% year-to-date, and investors have yet to receive a convincing answer as to whether the software giant’s massive AI expenditures are translating into cloud revenue growth.
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