The September payrolls report in the US came out much stronger than expected, as job creation, unemployment and wage increases all came out significantly better than expected.
The Federal Reserve appears to have engineered a proper soft landing, which should increase the chances of a more gradual pace of FOMC policy loosening - chair Powell nodded to as much during his remarks last week. Indeed, markets now see less than a 10% chance of a 50bp cut from the Fed next month, with a ‘standard’ 25bp cut now the market’s clear baseline scenario.
While risk assets will welcome lower US rates, the strength of the US economy, a more hawkish than expected Fed, and growing geopolitical fears about the Middle East escalation could keep the USD well bid.
The main source of uncertainty now is the presidential election. This remains too close to call, with betting odds pointing to an effective dead heat following last week’s VP debate.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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EUR/USD stays below 1.1000 ahead of Fedspeak
EUR/USD moves sideways in a tight range below 1.1000 on Monday. The data from the Eurozone showed that Retail Sales rose by 0.2% on a monthly basis in August as forecast, failing to boost the Euro. Investors await comments from Fed officials.
GBP/USD struggles to recover above 1.3100
GBP/USD stays under bearish pressure and trades in the red below 1.3100 on Monday, erasing early gains. The pair is undermined by a negative shift in risk sentiment but the downside remains limited as the US Dollar struggles to build on previous week's gains.
Gold retreats below $2,650, remains confined in a familiar trading range
Gold price remains on the defensive amid reduced bets for a 50 bps Fed rate cut in November and trades below $2,650 to start the week. The USD consolidates last week’s strong gains and exerts some pressure as investors keep a close eye on geopolitics.
Is “Uptober” here for Bitcoin?
Bitcoin stabilizes at around $63,000 on Monday. US spot Bitcoin ETF experienced outflows week-on-week. NYDIG report highlights that Bitcoin remains the best-performing asset this year, with a 49.2% year-to-date gain.
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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