Market Report 01/09: September starts with a Big Day
Tomorrow will be a very important day for all the markets in the world; forex, commodities, stocks, indexes, EVERYTHING will be affected for the numbers of the U.S. nonfarm payroll jobs report. It appears that in the coming September FOMC meeting, the Fed’s decision will depend on the Labor Department’s Sept 2 job report. If job report this Friday continues to show a solid gain with increasing earning growth, then the chance for a September rate hike may increase.
In the last meeting, Fed Chair Janet Yellen’s speech opened the door to a September hike when she said the case for a rate increase had strengthened in recent months. If the Fed doesn’t increase rate in September, it still has a chance to raise rate in November before U.S. elections and another one in December.
On Wednesday, ADP released its private-sector jobs report showing companies added 177,000 positions in August, while the July figure was revised higher to 194,000 from the initially reported 179,000. For the investor the ADP reports are the basis to predicting what can be the NFPs of tomorrow. With these numbers we can expect an improvement in nonfarm payrolls tomorrow, but it’s not so clear, because the 177,000 is slightly better than the forecasts in 175,000. Even that, the interest rate future market shows the probability of a rate hike in September rose to 42% from 32%, and the probability of a rate hike in December rose to 64.7% from 57%.
NFP reports had been mostly strong over the last two years, pushing the U.S. workforce towards saturation with falling unemployment rates. Initial expectation for this month are around 185-190K jobs added to the U.S. workforce. A reading above this figure could act as a positive signal for the Fed’s rate hike plans, causing the dollar strengthen and commodities denominated in USD, such as oil and gold, to be under pressure. However, these effects can be mitigated through other market factors and geopolitical forces.
Meanwhile U.S shares ended yesterday in a negative trend after the ADP reports released, the Dow Jones closed 0.3% lower, The Nasdaq composite ended with a 0.2% declined and the S&P 500 finished in -0.24%. And today in Europe the Stock markets opened positive, the financial sector is trading in a very positive trend because of the correlation with the Banks in U.S.
In the commodities, the Gold to a certain extent can be considered as a USD play and thus if USD is weakening, is going higher and vice versa, so tomorrow is also a very important day for the commodities. Technically, Gold is nearing support area around $1300, which is the previous resistance that may turn to support.
The lowest euro is making good for the numbers of the exports companies and BMW is raising more than +1%, but technically we can see a very strong point of resistance in the level of 79.27 eur.
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The European Union accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs and the European Union imposed to Apple a 13 billion euro back tax bill. Curiously after these problems in the company, the stock is still stronger and just lost -1% in the last days. Today we are expecting a positive trend in Apple, after the point of support in 106 usd.
Graphics by: www.etoro.com
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