- Non-farms miss expectations, but wage growth rises and unemployment falls
- Data continues to point to a possible increase in rates in September
- Equities fall as dollar rises
This morning’s risk-averse mood has been justified by US job numbers this afternoon. Although the headline number missed expectations, a look beneath the bonnet revealed that wages were still growing, and at a faster-than-expected pace, while short-term unemployment was down. It is hardly surprising to see actual job growth slow, since the US economy is now close to ‘full employment’, and so the underlying figures take on greater importance. Overall, it looks like US data might still provide the rationale for a rate increase this month, although the decision is finely-poised. As such, I would not be surprised to see Janet Yellen and co split the difference, and opt for a 10 basis point move rather than the 25 point rise that is the standard expectation. In this way she could defend herself against claims both that she is asleep at the wheel and that the US economy is not ready for a full cycle of tightening just yet.
The new week will be complicated by two developments – a US bank holiday and the reopening of Chinese markets. The former could prompt a fairly dull session in Europe without US traders to lighten the mood, but the latter may see another selloff as Chinese investors return to the fray. China data during the week will also provide much-needed information on whether a further slump in equities is justified.
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AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
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