With major macroeconomic events such as the OPEC and ECB meetings in Vienna coming and going yesterday without any substantial market reaction, it appeared that the traditional summer lull in markets may have already set in. However two bad data points from the US - in particular the drastic decline in the NFP number - have shocked the markets into life with the US dollar plummeting and Gold surging higher.
The headline NFP number of 38k was the lowest since September 2011 and the additional downward revision to last month’s reading heaped more woe on an already worrying report. Not long afterwards the ISM non-manufacturing number was also below expectations and failed to offer a reprieve for the buck. In light of this expectations for another FOMC rate hike in the short term have been moved even lower and banks such as Barclays and BNP Paribas have revised their forecasts to a more dovish stance.
Stock markets have been rocked by the weakness these latest data points have highlighted with the Dax (-1.32%) dropping by more than 100 ticks. US indices are rather surprisingly not bearing the brunt of the sell-off but nevertheless trade in negative territory with the US500 (-0.47%) at 2093 on the European cash close.
In the commodity space the biggest mover has been Gold ( 2.32%) which has received a double boost in the depreciation of the us dollar as well as some safe haven flows. The precious metal trades up by more than $25 on the day at $1239/oz at the time of writing. Crude benchmarks have been relatively quite today but Brent (-0.70%) looks unlikely now to close the week above the $50 handle.
As previously mentioned the US dollar is down across the board today with the NZDUSD ( 1.90%) the biggest beneficiary. Both the GBPUSD ( 0.77%) and EURUSD ( 1.58%) have moved significantly higher, although the difference in size of their moves reflects some weakness in sterling.
Next week kicks of in earnest on Monday evening with Fed chair Yellen speaking at 17:30 before the RBA rate decision at 05:30 on Tuesday morning. Chinese Trade balance overnight on Tuesday could be important before the RBNZ rate decision comes on Wednesday night at 22:00. Canadian employment change is out at 13:30 on Friday before University of Michigan consumer sentiment rounds off the week at 15:00.
Any person acting on this information does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.