Non-Farm Employment Change Numbers Today Will Impact FOMC
U.S jobs numbers will stir Forex, gold and equities. These fundamentals should be given attention because mid-term outlooks could shift slightly today.
Trading Risks: Easy to be Nervous Now, But Calm is Needed
Trading Risks: Easy to be Nervous Now, But Calm is Needed
Simply put it is too easy to be nervous when contemplating the markets if you are a day trader. Today the Non-Farm Employment Change data will be published in the U.S and the Middle East conflict continues to reverberate. However, if a speculator looks at the markets they will see risk adverse trading has produced rather predictable results in many assets.
Gold remains within its higher known price realm, and WTI Crude Oil is trading around 74.00 USD after President Joe Biden for some odd reason felt it was necessary to discuss publicly potential targets Israel may pursue against Iran. Also, Biden’s influence on the decision making in the Middle East appears to be fleeting and this is making financial institutions additionally anxious.
WTI Crude Oil Five Day Chart as of 4th of October 2024
The employment numbers from the U.S today are vital regarding the Federal Reserve’s interest rate decision for November. If today’s jobs statistics come in weaker than expected this could help the USD lose some ground in Forex against major currencies. However, there is also the prospect that headwinds via concerns from the Middle East will keep a steady diet of risk adverse trading a driver for behavioral sentiment going into the weekend. Forex remains dangerous for day traders in the near-term.
Traders who believe more volatility will come because of the ramifications in the Middle East can certainly pursue assets like gold and WTI Crude Oil. Correlations with risks that are flourishing as potential conflict brews is not a foolish wager, but it is also difficult for speculators to pursue these trades via CFDs offered by many brokers, this because day traders may have to hold onto their positions too long in order to take advantage of potential moves. If a speculator can pursue options positions via future markets, this could prove to be a solid tool, provided strike prices are not outrageously expensive and the prospect of time erosion is not too fast.
Gold Five Day Chart as of 4th of October 2024
This is not an easy time to be a day trader and those that are nervous should choose to remain on the sidelines. U.S Treasury yields have increased this week as behavioral sentiment has become jittery. It is important to remember however that short-term reactions are frequently not related to long-term outlooks. Treasury yields have come down significantly in the mid-term and remain within the lower part of their range. The same can be said for equity indices this week. The notion that the world will not spin out of total control should be considered. Risk adverse trading will certainly begin to gravitate towards optimism at some point, it is only a question of time.
The point for day traders is this, it is easy to be nervous. Watching television all day and looking at smartphones for updates on developing sagas does not help create calm. Large institutional traders have been within these volatile waters before. Yes, large players also have to remain diligent, but they will certainly do their best to remain realistic. Short-term price velocity often leads to reversals and you can be assured large financial institutions will take advantage of this insight.
If today’s U.S jobs numbers meet or come around expectations this would be a welcome result for markets which appear to be standing on fragile ground. Traders while looking at today’s Non-Farm Employment Change numbers and Average Hourly Earnings statistics should also be mindful of downward revisions to previous reports which have occurred almost consistently for a handful of months. Initial trading reactions to the publication of jobs data are often met with sudden reversals due to revisions in numbers being spotted a few moments later by analysts.
USD/JPY Five Day Chart as of 4th October 2024
As for the Middle East, financial institutions and traders are all in the same boat. Patience and deep breaths are needed. The trillion dollar question lurking, is there an end game that is viable and can restore calm, or will retribution and hatred cause the conflict to spiral out of control?
The volatility seen in Forex the past handful of days, including the USD/JPY, have caused dynamic results. There is no denying risk adverse trading has taken hold of the marketplace. The trifecta of U.S jobs numbers today, tensions in the Middle East, and the approaching U.S election have set the table for a tumultuous meal. At some point day traders may want to walk away from the table to avoid indigestion and return only when tranquility has been restored.
Fed Plays Catch Up and Sets a Calm Table for Day Traders
Fed Plays Catch Up and Sets a Calm Table for Day Traders
The Fed essentially played a game of catch up on Wednesday when they cut the Federal Funds Rate by 0.50%. The interest rate cut was bigger than AMT expected because of the Fed’s rather cautious stance the past handful of years. However, the move by the FOMC was certainly justified and welcomed, and now financial institutions have been given what most thought was bound to happen, a roadmap to at least a 0.75% Federal Funds Rate cut over the next six months. Longer term many believe the Fed will continue to be aggressively dovish if U.S economic conditions cooperate.
USD/JPY One Year Chart on the 20th of Sept. 2024
Traders certainly seem to be leaning into the notion another 0.25% will be trimmed by the Federal Reserve in November. And this sets the table for day traders to now face potentially calmer market conditions that react solely to economic data, geopolitical events and the occasional flashes of news. The U.S presidential election will certainly be a big event on the 5th of November. Long-term investors are likely feeling rather tranquil and have not been surprised. Behavioral sentiment over the next month should be easier to gauge.
USD Cash Index One Year Chart on the 20th of Sept. 2024
So what happens near-term? The Bank of Japan today, like the BoE yesterday, stood in place. The USD/JPY is trading near 142.300 as of this writing. The GBP/USD is near 1.32890. Gold is hovering near 2,600.00 and WTI Crude Oil is approximately 72.00 USD. Perhaps short-term traders should keep one eye on the Middle East this weekend, but for the moment it doesn’t appear a major escalation is about to ignite in the region. Yes, there is saber rattling, but composure may actually prevail. Those looking for a sudden emergence of a strong USD trend may find that headwinds keep the greenback within the lower realms of the USD Cash Index.
Gold One Year Chart on the 20th of Sept. 2024
Next week’s U.S GDP numbers on Thursday the 26th, and the Core PCE Price Index results on Friday the 27th will get plenty of attention. What the Fed and financial institutions would like to see are stable economic numbers which do not spark fears of a recession. The almighty ‘soft landing’ being pursued by the Federal Reserve is likely being hoped for too by financial institutions via their mid-term outlooks.
The Federal Reserve is supposed to be an independent entity not associated with the Executive Branch of the U.S government regarding oversight. There has been some bantering about the potential that the Fed cut by 0.50% before the U.S elections and Powell proclaimed the U.S economy is doing well to help the Democrats, but this is unlikely. Conspiracy thinking aside, the broad markets are now going to be a barometer regarding economic outlook based on data such as growth, jobs numbers and inflation; clarity regarding a more dovish Fed has been delivered in many respects, data has to justify their decision moving forward.
Day traders may have the ability to follow their technical charts and gather behavioral sentiment perspectives over the next month serenely by watching barometers like gold and U.S Treasury yields. As the U.S election draws closer financial institutions may start to position for potential outcomes, but with polls indicating a tight race currently they would be foolish to bet on one particular outcome. Meaning the broad markets including equity indices, Forex, U.S Treasury yields and even commodities may be moving within fairly priced equilibriums for the moment.
As the Dow 30 and S&P 500 move within record heights, the Nasdaq 100 is slightly below its all-time highs. Yet, it should be remembered the Nasdaq 100 still has done remarkably well the past year and although not at an apex level has the potential to scale upwards quickly. Optimism for the moment seems to be driving the financial markets and day traders should keep this in mind. However, speculators should remember risk management is essential, not over leveraging ideal, and keeping realistic price targets remains always important.
AMT Top Ten Miscellaneous Postings for the 5th of April 2024
AMT Top Ten Miscellaneous Postings for the 5th of April 2024
10. Petrichor: The pleasant smell after a rain has fallen following a long dry spell which elicits earth’s fragrance. The Fed is likely hoping for this sensation via ‘weaker’ Non-Farm Employment Change numbers today. In December the Federal Reserve spoke about data signals needed in order to cut interest rates. If jobs statistics are stronger than anticipated, there will be no ‘petrichor’ for the Fed.
9. Underreported: Five engineers from China on their way to work for the Dasu dam project they participated, were killed in a ‘suicide’ terrorist attack in Pakistan on the 26th of March. Terror attacks in Pakistan on Chinese involved with infrastructure ‘Economic Corridor’ work have been increasing.
8. Qubits: Microsoft and Quantinuum recently announced they have made breakthroughs regarding quantum computing research reliability. Results have shown 14,000 ‘test routines’ without errors. The emergence of quantum technology approaches.
7. Intrinsic Value: Cocoa is near 9640.0 USD per metric ton as of this morning and remains speculatively energetic. Bitcoin is slightly below 67,000 USD and continues to ‘beat’ the notion that intrinsic value is important.
6. Precious: Gold prices have ‘fallen’ below 2300.00 USD per ounce, and is near 2289.00 for the moment, but the metal is shining as crowds admire its ability to create a safe haven.
5. WTI Crude Oil: Middle East news is rumbling and hyperbole is resonating, the price of the commodity is over 86.40 USD per this writing. A calm weekend, and peaceful end to Ramadan this coming Tuesday might help calm nerves. Higher oil prices will not help global inflation.
4. Forex: The USD/JPY has started to experience waves of volatility and has recently challenged long-term highs. Bottom line is the notion that large players are positioning for today’s U.S data which will affect all financial assets as USD centric power resounds.
3. Equities: The U.S major stock indices are beginning their day near lows not seen since the 15th of March for the Dow 30, and the 19th of March for the S&P 500 and Nasdaq Composite. Nervous?
2. Bonds Watch: U.S Treasuries need to be monitored as the 5, 7, and 10-Years Notes respond to nervous investors and fears of a new ‘inversion’. Having come off of high yields a couple of days ago, doesn’t mean all is well as values languish near late September 2023 technical realms.
1. Data: Recent chatter from many Fed FOMC members have created anxious investors. Vivid reactions will occur after the Non-Farm Employment Change and Average Hourly Earnings. Bluntly, today’s jobs reports are crucial and the Fed would like the results to be weaker than anticipated in order to consider cutting interest rates. However, if hiring comes in stronger, it would be a sign of a resilient U.S economy and would ignite more USD strength. The first half hour following the jobs numbers may look counter-intuitive regarding price action as financial institutions adjust their trading positions.
USD and the Fed: Parade of Jobs Data Ready to Make Noise
USD and the Fed: Parade of Jobs Data Ready to Make Noise
U.S data last week created landmines for Forex speculators and the Federal Reserve. Global financial markets return to full action today following the long holiday weekend. Growth and inflation numbers from the States last week provided more unsettling results for financial institutions. While Forex has proven difficult for many traders, the major equity indexes are flirting with highs but also running into some intermittent headwinds.
US Dollar Index Six Month Chart as of 2nd April 204
In December of 2023 the Fed was interpreted as having confirmed it would be able to cut the Federal Funds Rate during the 2024 calendar year rather consistently. Dovish policy had been anticipated by financial institutions which began to sell the USD aggressively in November. But by the end of the Christmas week the USD had essentially hit lows in many major currency pairs, and as January started reversals intensified.
The last three months of trading has produced choppy conditions in Forex, but one thing is clear – financial institutions no longer believe the Federal Reserve will be able to aggressively cut the Federal Funds Rate. The Fed has now begun to show signs that it is nervous regarding U.S economic data, this as growth via GDP numbers has remained firm, inflation sticky, and consumers resilient. Clouds shadow Forex and day traders have been hampered by a lack of solid trends.
Gold Six Month Chart as of 2nd April 2024
Gold is trading near record price levels. The fact that the precious metal is touching all-time values as the USD has been strong has flustered some speculators. But traders need to remember Gold is affected by large players, including nations, that may be hedging USD bets and preparing for political instability. The price of Gold may underscore belief the U.S Fed will have to cut rates at least a couple of times this year no matter the economic facts on the ground, because this is an election year and if the central bank doesn’t deliver on its ‘promise’ jobs at the Fed may be at stake.
WTI Crude Oil One Month Chart as of 2nd April 2024
Not making anything easier for Federal Reserve policy is the higher price of WTI Crude Oil which has reached the 84.00 USD per barrel price. If energy costs go higher this will not help the fight against inflation. OPEC will be conducting a meeting this week. As an aside the price of Cocoa per metric ton is now over 10,000.00 USD, which is more expensive than Copper. While the price of Cocoa is not a game changer for global financial markets, the higher price will make chocolate more expensive, which some traders may find disagreeable as they try to relax and watch their speculative wagers while trying to nibble on their favorite snack.
Monday, 1st of April, U.S ISM Manufacturing – both the Purchasing Managers Index reading and the Price numbers came in higher than expected. The stronger results show the U.S economy remains better than anticipated by the Federal Reserve, which has been counting on its higher interest rate to slow down growth and inflation.
EUR/USD Six Month Chart as of 2nd April 2024
Tuesday, 2nd of April, European Manufacturing PMI – the European Union and Great Britain will release their business readings today. The results will demonstrate insights regarding sentiment. Financial institutions are worried the European Central Bank and Bank of England may have to consider lowering their interest rates before the Federal Reserve. The EUR/USD and GBP/USD will react to the results.
Tuesday, 2nd of April, U.S Federal Reserve FOMC Members – there will be appearances throughout the day in the U.S from various Federal Reserve members who will make the case for their monetary policy outlooks. It should be noted that Jerome Powell will be speaking on Wednesday. The JOLTS Job Openings will come out before the FOMC members speak. While the JOLTS report will not cause earth shattering reactions, the jobs data is the beginning of the parade regarding employment statistics for this week.
Wednesday, 3rd of April, U.S ISM Services PMI – taking into account the Manufacturing report came in stronger than expected on Monday, the Services data will be watched by financial institutions. If this report is better than anticipated, USD sellers will not rest easy. The ADP Non-Farm Employment Change data will also be released on this day.
Thursday, 4th of April, U.S Weekly Unemployment Claims – the Federal Reserve has been counting on employment strength to erode based on their notion that higher interest rates would create ‘lagging’ reactions in the jobs sector. Jerome Powell has said the Fed is anticipating weaker employment data. The results from the weekly report will not be as significant Friday’s data, but should be given attention by day traders in Forex.
Friday, 5th of April, U.S Non-Farm Employment Change and Average Hourly Earnings – the climax for speculators this week will be these jobs numbers from the States. If the numbers produce less hiring than expected this would help USD bearish momentum. Wages will also prove crucial regarding behavioral sentiment for financial institutions. Simply put, the Federal Reserve is anticipating that weaker employment numbers are going to be seen, if this doesn’t happen it might cause major volatility in Forex going into the weekend.
Friday’s Forex Violence and Coming Attractions for Traders
Friday's Forex Violence and Coming Attractions for Traders
While the past month has continued to produce positive trends upwards for traders speculating on equities via U.S indices with record breaking values, Forex has been rather brutal for many day traders if they have remained stubborn.
Short-term trading conditions in Forex again proved violent this past Friday, as the Non-Farm Employment Change and Average Hourly Earnings reports came in stronger than anticipated and set off fireworks in the major currency pairs.
Fed Chairman Jerome Powell offered a clue to speculators paying attention last Wednesday, during the Fed’s Press Conference in which he spoke about the tight labor market. It seems likely the Federal Reserve knew the jobs data was going to be rather robust and hinted.
The Federal Reserve did continue to speak about interest rate cuts, but they certainly have not given an exact timetable when more dovish policy will begin. This has left many speculators, corporations and financial institutions nervous and the results via choppy trading conditions the past handful of weeks are proof.
USD strength the past month has caused headaches for many Forex speculators, but it needs to be said that many major currency pairs are lingering near values post-December 13th 2023, this was when the Federal Reserve made it ‘official’ that a more dovish monetary policy would develop in 2024.
Early wagers by financial institutions in December indicated they believed a March Federal Funds Rate cut would be seen, but after last Wednesday’s Fed’s FOMC Statement and Friday’s jobs numbers it seems more likely for the moment a May interest rate cut could be a legitimate target.
WTI Crude Oil Three Month Chart as of 5th February 2024
Risks do Abound and Speculators Should Remain Cautious Near-Term
Inflation concerns via knock-on affects from logistical complications via Red Sea chaos which disrupts the Suez Canal shipping is a legitimate threat and needs to be monitored. However, the price of WTI Crude Oil traded in a remarkably stable manner last week as noise was heard from the Middle East. In early price action this morning the commodity has been polite and remains within sight of 72.00 USD per barrel. The lack of a nervous reaction in Crude Oil thus far could keep global investors calm.
This week will be limited regarding important economic data. However, there will be plenty of rhetoric offered by U.S Federal Reserve members in the coming days via conferences and interviews. Forex traders have needed to combat an array of reversals as price equilibrium has created rather tenacious price realms and this may continue near-term.
There are time periods when traders should be willing to accept that methods regarding short-term trading tactics need to be adjusted. January has shown that financial institutions were of the mindset the USD had gotten too strong. And although it appears financial institutions continue to lean towards a weaker USD outlook in the mid-term (as proven by lower moves in the USD leading up to the jobs report on Friday), the surprisingly good jobs data certainly caused the USD to bounce upwards.
Technical considerations of the USD at this moment are important, fundamental data is still coming in rather mixed, this as financial houses wait on central banks to start reacting with interest rate cuts due to lackluster economic data. It is important to note that some analysts have started to murmur the ECB and BoE may have to move first regarding interest rate cuts – if they have the courage to take this action sooner rather than later. The U.S economy has remained rather strong regarding consumer sentiment and this is causing angst among Fed observers. The U.S jobs numbers on Friday highlighted this nervousness.
Monday, 5th of February, U.S Services PMI via ISM – an outcome of 52.0 is the expected reading, which would be higher than the previous result of 50.6. If the Services number meets its estimate and doesn’t exceed the expectation, this would calm nervous financial institutions which may believe the U.S economy may be too strong for the Federal Reserve’s liking, and cause some hawkisk sentiment regarding monetary policy to linger. A weaker number from the Services PMI could help the USD selloff slightly, a stronger outcome could result in more USD buying short-term.
Tuesday, 6th of February, Australia Cash Rate and Monetary Policy Statement via RBA – no major changes are expected from the Reserve Bank of Australia. Global central banks have taken a wait and see approach as they likely remain nervous regarding the potential of inflation to remain stubborn in the mid-term. The RBA is probably going to follow the ECB, BoE and Fed’s stances from last week and remain conservative.
EUR/USD Six Month Chart as of 5th February 2024
Wednesday, 7th of February, Germany Industrial Production – though this report is not viewed as a major economic event for traders the results should be watched. The EUR/USD has been hit by rather volatile conditions as financial institutions try to anticipate central bank moves. If the German data comes in weaker than expected (a minus -0.4% result is anticipated) this could make the EUR/USD slightly more bearish.
Shanghai Composite Index One Year Chart as of 5th February 2024
Thursday, 8th of February, China CPI and PPI – economic data from China has not improved and foreign investors are not showing an appetite for risk. Deflation remains a concern in China, and although the official government rhetoric promised sunnier days ahead, fundamentals in real estate, manufacturing and consumer driven data offers troubled prospects. The Consumer Price Index from China is anticipated to be worse than the previous month’s outcome. The downturn in the SSE (Shanghai Composite Index) is now challenging the 2,700.00 vicinity.
Friday, 9th of February, Canada Employment Change – Canadian economic data has been lackluster and analysts have been quite critical of government policy. Having said this the USD/CAD is largely going to stay in a USD centric mode going into the weekend.
AMT Top Ten Miscellaneous Morsels for 5th of January 2024
AMT Top Ten Miscellaneous Morsels for 5th of January 2024
10. Book: Truth to Power – My Three Years Inside Eskom by Andre de Ruyter, an insider’s account about South Africa’s public energy company amidst corruption, mismanagement and scandal.
9. NBA: Last night’s Milwaukee and San Antonio game was the first ‘match’ of Giannis Antetokounmpo and Victor Wembanyama. Basketball is global and spectacular.
8. Noise: Clickbait media headlines about nervous results in financial markets this week have been exaggerated.
7. Horn of Africa: Ethiopia and Somalia are arguing about a port passage through ‘Somaliland’, astute eyes should be kept on the region and Egypt.
6. Diplomacy: U.S foreign policy has delivered poor statesmanship with India recently, allowing Russia to reinitiate its longstanding relationship with the nation.
5. Taiwan: Presidential election is on the 13th of January. President Tsai Ing-wen is not eligible to run again because she has now served two terms.
4. USD/JPY has ebbed higher and next week’s results promise to be rather insightful regarding the outlooks of financial institutions. Reversals coming?
3. China: Economic concerns in the Asian giant continue to mount as deflation threatens to become intractable and investors fret.
2. Data: U.S jobs numbers coming today, the results are anticipated to be slightly weaker. A reaction in the broad markets is certain, but it is full market volume next week which will set the tone.
1. Outlook: Anxious short-term trading results from the past two weeks are likely going to be confronted by optimism and risk appetite next week. Who will win?
Trading Optimism for 2024 and Pursuit of Castles in the Air
Trading Optimism for 2024 and Pursuit of Castles in the Air
Traders may feel like horses being kept in their stables right now. The desire to run freely in Forex and other markets is certainly being felt, this as many analysts have jumped onto optimistic bandwagons and are pointing to the U.S Federal Reserve and its rather dovish outlook for 2024. Gold in early trading this morning is lingering near highs and the USD remains within weaker territory when technical charts are inspected via one month results.
Gold Three Month Chart as of 2nd January 2024
Yet, thin holiday trading is full in effect. Light volumes will continue to be seen early this week after the New Year’s celebrations. Financial institutions will open their doors today, but their corporate clients around the world will have plenty of employees who will remain on vacation until the 8th of January. Thus, while day traders may feel enticed to wager in the markets with various CFDs, they should be careful and understand unbalanced positions may cause temporary chaos. Risk taking tactics should be carefully considered.
The desire to dream about castles in the air is a source of comfort for many new day traders. But remaining realistic about potential results, while not getting overly ambitious about targets is an important aspect for all speculators. While trends may look attractive in Forex, commodities and equities a well planned approach regarding risk taking is a practical road. Castles in the air tend to vanish.
Optimism will be a word frequently heard in the coming days and weeks, and here’s to wishing everyone a prosperous and peaceful 2024. The potential of a more dovish U.S Federal Reserve regarding monetary policy and declining Treasury yields sparking more risk appetite in equities as investors seek solid returns is alluring, however risks remain on the table. The economy of China continues to worry analysts and tensions in the Middle East are still a long way from being solved.
However, the biggest cause for speculative concerns during 2024 may come from elections in Taiwan, India, South Africa and the United States. Taiwan’s presidential vote is on the 13th of January. China will certainly be watching the results, and traders should expect to hear swords rattling afterwards and then hope the noise calms down.
USD/ZAR One Year Chart as of 2nd January 2024
Tranquil voting results in India will be welcomed by investors. India is becoming a noteworthy economic giant, its rapid growth and ascension as an important investment vehicle needs to remain stable. South Africa remains troubled domestically by concerns regarding corruption and inefficiency, its upcoming spring election results may not solve the problems it faces. There will be many elections in Africa this year, which could spur on considerations regarding geopolitical alliances and the price of commodities.
The U.S election late in 2024 will start to grow in noise as the months progress and by early this summer behavioral sentiment will begin to become nervous regarding the outcomes for the White House and Congress. The U.S appears to be braced for an election between Joe Biden and Donald Trump and this will certainly cause skittish storms.
Traders should feel confident about risk appetite in the global markets improving, but they should keep in mind that impetus coming from many different spheres can affect the financial world.
Tuesday, 2nd of January, U.S Final Manufacturing PMI – today’s Purchasing Managers Index is expected to show a slight improvement, but the results may fall on deaf ears because many market participants will not be around to react due to the fact they are still on vacation.
Wednesday, 3rd of January, U.S ISM Manufacturing Prices – this inflation survey from purchasing managers may be given a bit of attention, but its effect may be limited because of light trading volumes still being exhibited.
Thursday, 4th of January, Germany Preliminary CPI – the inflation data from Germany will get some consideration, and the result is expected to show a slight increase. Services PMI data will also come from European Union nations, the U.K and U.S.
Friday, 5th of January, U.S Non-Farm Employment Change and Average Hourly Earnings – the jobs reports will get the notice of financial institutions. The results for employment and wages are expected to be slightly weaker than the previous month’s outcomes. Typically these numbers would cause a stir, but unless there are surprises, most financial institutions may not react massively to the reports because it remains a ‘holiday’ week. If the numbers come in weaker than expected this could cause interesting reactions on the 8th of January and weaker USD sentiment.
AMT Top Ten Miscellaneous Niblets for Friday 6th of October
AMT Top Ten Miscellaneous Niblets for Friday 6th of October
10. World Cups: Big weekend ahead in Rugby and Cricket international competitions.
9. Book: Darkness at Noon by Arthur Koestler.
8. Travel Tip: The Western Cape of South Africa.
7. Inflation: Dramatic increases in costs of food globally causing nutrition concerns.
6. Jobs: U.S Non-Farm Employment Change data on the calendar.
5. Music: “In a Sentimental Mood” by Duke Ellington and John Coltrane.
4. Gold: Precious metal still languishing as USD remains strong amidst nervousness.
3. Salaries: U.S Average Hourly Earnings statistics results today will be a catalyst.
2. USD: Major currencies still weak as strength of USD causes duress.
1. U.S Indices: Equities behavioral sentiment appears fragile in stock markets.
Nervous Outlooks and Short Term Fixes Creating Anxiousness
Nervous Outlooks and Short Term Fixes Creating Anxiousness
A U.S government shutdown has been avoided, but the resolution highlights that an important year of political games is getting fully underway in Washington. Short term fixes via congressional agreements do not hide the fact the U.S government continues to bleed money and is adding to its deficit as yields on U.S Treasuries remain high.
Gold Five Day Chart as of 2nd October 2023
The price of gold has sank substantially in the past week, which shows the USD continues to be strong, and that speculative short-term games within the precious metal must always be kept in mind by day traders. Long term fundamental beliefs regarding the value of gold cannot stop momentary volatility.
GDP results from the U.S last week came in slightly below estimates, but the ability to still sustain growth also creates the suspicion the U.S economy remains stubbornly strong, which effectively puts the U.S Federal Reserve in a rather difficult place. Crude Oil prices have remained high, and this week’s coming jobs data will be important for short and mid-term market participants as they position themselves while nervous behavioral sentiment continues to be evident.
U.S stock markets are near three month lows and trading conditions choppy, this as yields on U.S Treasuries are elevated and create a tough road for speculators to navigate in the short-term.
Monday, 2nd of October, U.S ISM Manufacturing PMI – a reading below 50 is anticipated which would mean sentiment remains negative regarding the U.S economy, but Core Durable Goods Orders came in better than expected last week. Thus, the result of this manufacturing report could play into short and near-term USD trading and cause a ripple as financial houses anticipate the jobs numbers later this week.
Tuesday, 3rd of October, Reserve Bank of Australia – the RBA is expected to keep its Cash Rate in place. If the RBA cooperates with financial institutions and does not change its key borrowing rate , the RBA Rate Statement will come into focus. However, the AUD/USD is still within the shadows of U.S Federal Reserve like most other major currencies.
Wednesday, 4th of October, U.S ISM Services PMI – the outcome from the Services report is expected to fall below last month’s outcome. The slight miss in the GDP numbers last week was noteworthy, but the better than expected Core Durable Goods results will make this report of interest and provide a bit of impetus to the USD and U.S indices before Friday’s key jobs data – particularly if the Services reading is better than anticipated.
GBP/USD Three Month Chart as of 2nd Oct. 2023
Thursday, 5th of October, U.K Construction PMI – while not considered a major publication by many analysts, the ordering by purchasing managers in Britain may prove relevant as an indicator regarding outlook. The Bank of England held their interest rates in place a couple of weeks ago and this was based on the belief the U.K economy is slowing. The Construction PMI report is expected to come in slightly below last month’s outcome which could set the table for slight choppiness in the GBP/USD which has continued to trend lower.
Friday, 6th of October, U.S Non-Farm Employment Change and Average Hourly Earnings – the combination of these two reports will impact USD trading before their publication and afterwards for several hours. Financial institutions will examine these statistics carefully. If there is a hint of weakness in the U.S jobs market and wage inflation is tame, this could make the USD weaker. However, if jobs hiring remains firm and there is a slight uptick in the costs employers are having to pay workers, the USD could get stronger.
Risk Events Pose Danger this Week
Risk Events Pose Danger this Week
Monday 1st of May, U.S ISM Manufacturing PMI – weaker than expected Advance GDP results last week make this report of keen interest for investors regarding U.S growth (or recessionary) prospects.
Tuesday 2nd of May, Australia RBA Cash Rate – Reserve Bank of Australia is expected to hold the line regarding borrowing.
EUR/USD 1 Month Chart as of 30th April
Wednesday 3rd of May, U.S Federal Reserve FOMC Statement and Federal Funds Rate – U.S central bank expected to raise by another 0.25% making key lending mark 5.25%. This number has been digested into the broad markets, what investors want to know is the Fed’s June outlook. Federal Reserve outlook and FOMC Press Conference will move Forex and equities globally. Traders remains suspicious regarding another hike in June.
Thursday 4th of May, E.U ECB Main Refinancing Rate – European Central Bank expected to hike by another 0.25%. Anything different would be a surprise. ECB Press Conference should be rather tranquil.
Friday 5th of May, U.S Non-Farm Employment Change and Average Hourly Earnings – while jobs numbers are always of interest, it is the earnings statistics which should be watched and will give insight regarding inflation and potential actions about Fed’s June considerations.