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Attachment 32871
The Fed’s rate hike was no surprise, considering that futures prices had pegged odds at 100%. What might have surprised some was removal of “accommodative” language from the Fed’s statement. However, the strong economy arguably makes that support unnecessary.
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The unemployment rate and average hourly earnings are the key metrics to watch. It is likely that the underemployment rate could fall to 7.1% and this could push the dollar index higher triggering a sell-off for emerging markets.
Attachment 32956
In simple words, at 185K the expectations for the U.S. NFP number are sky high. Speculators are even hoping for a number above 200K. But, the two most important numbers that traders will be looking at are the average hourly earnings number and the underemployment number. The last one is an indicator that represents the people who have given up looking for a job, in other words, slack in the labour market. Jerome Powell has already declared the special attention he pays to the average hourly earnings number. The expectation for the average hourly earnings m/m is 0.5%, while the previous reading was at 0.4%. The underemployment number printed a reading of 7.4% and if this number comes at 7.1%, it will be immensely positive for the dollar.
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Trading the News: U.S. Non-Farm Payrolls (NFP)
Updates to the U.S. Non-Farm Payrolls (NFP) report may fuel the recent weakness in EUR/USD as the world’s largest economy is anticipated to add another 185K jobs in September. The Unemployment Rate is also expected to narrow to 3.8% from 3.9% per annum in August, and signs of a more robust labor market may encourage the Federal Reserve to deliver another rate-hike in 2018 as Chairman Jerome Powell notes that ‘the economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective.’
Attachment 32975
In turn, the Fed officials may continue to prepare U.S. households and businesses for higher borrowing-costs as ‘the Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term,’ and a set of positive developments may ultimately heighten the appeal of the dollar as market participants gear up for higher U.S. interest rates. U.S. Non-Farm Payrolls (NFP) increased 201K in August following a revised 147K expansion the month prior, while the jobless rate held steady at 3.9% per annum during the same period amid projections for a 3.8% print. Nevertheless, a deeper look at the report showed the Labor Force Participation Rate narrowing to 62.7% from 62.9% July, while Average Hourly Earnings unexpectedly climbed to 2.9% from 2.7% during the same period.
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In Survivor: Wall Street vs Washington, the tribe has merged and the Wall Street tribe has voted Jerome Powell off the island.
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The European Central Bank will need to assure the markets tomorrow that the ongoing situation in Italy is under control. They need to select their language very carefully because this is going to have a significant impact on the euro. There are more odds stacked in favour of one particular trade.
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The Dow Industrials 545 point gain last Wednesday got the public’s attention but was this just a rebound in a downtrend or does it mean that the year-end rally is already underway? If the market is going to move higher which sectors should you be buying? Which ones should be avoided?
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Mrs. May has won the approval of the EU for her deal, but seems set for resounding defeat in the U.K. Parliament. If she is defeated, what happens next?
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The world is looking to this weekend’s talks for signs as to whether recent trade disputes with China, which have accelerated sharply under Trump’s protectionist agenda, can yet lead to some kind of conciliatory path.
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While the market focused on the possibility that the Fed may be near the end of rate hikes, Fed Chairman Powell made a more important point when he highlighted the risks that corporate indebtedness pose to the U.S. economy.
Attachment 33559
Stocks surged after Federal Reserve Chairman Jerome Powell delivered a speech to the Economic Club of New York on November 28, 2018, where he introduced the Fed’s Financial Stability Report, inspired by and modeled after the European Central Bank’s Financial Stability Review.
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Credit card provider MasterCard applies restrictive rules to unregulated forex and binary options brokers, crypto providers and ICOs. From now on a new set of revised standards enters into force for those classified as “high-risk securities merchants” and they will have to play by the rules and execute transactions only in jurisdictions where they are legally allowed to operate.
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