Stephen Innes
SPI Asset Management
Hong Kong stocks remain entrenched in a prolonged decline, hurt further by a significant drop in consumer prices in China, marking the steepest decrease in three years. This development has intensified worries about potential deflation impacting corporate earnings and profit margins, dragging down the region markets in a negative feedback loop.
In the interim, investors in the S&P 500 actively embrace the nuances of the Non-Farm Payrolls (NFP) report, even in the face of slightly higher-than-anticipated headline figures. Notably, the surge in productivity is currently counteracting over half of the inflationary effects resulting from increased labour costs. Despite a robust 4.0% year-on-year surge in hourly compensation, the rise in unit labour costs remains modest at just 1.6%, a notable contrast to the 6.5% observed when inflationary pressures began to emerge two years ago. If this trend persists, the Federal Reserve will face minimal challenges in achieving its 2% inflation target.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
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Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
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EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
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