Share markets continued to drift lower in Europe on Friday
The US dollar index is trading flat as Europe’s Friday session gets underway. The greenback gained almost two percent on its peers over the last couple of sessions, as investors braced for today’s release of US employment data. Mid-week was a turning point, with the greenback claiming back some of the ground lost since late September; until that point, the consensus in the markets had been shifting towards expecting a less aggressive Fed in the face of serious economic headwinds.
However, as the first big test to this scenario approaches the markets appear to be less certain that the US central bank is about to soften its approach to fighting inflation. Several senior Fed officials have publicly stated that controlling rising prices is an objective that may lead to a negative impact over the labour market. So, if today’s non-farm payrolls end up surprising to the upside the central bank will be very unlikely to change course. Should such scenario be confirmed, further dollar strength can be expected.
Ricardo Evangelista – Senior Analyst, ActivTrades
Share markets continued to drift lower in Europe on Friday, extending the bearish sentiment registered overnight in Asia, as investors digest disappointing corporate results ahead of today’s highly awaited US job report.
Cautious trading stances prevail at the beginning of the last trading session of the week, as poor earnings from AMD and Samsung Electronics and a batch of EU macro data missing estimates added pressure to market sentiment.
That said, even if these developments induced some investors to take some profit out following this week’s rally on stocks, no clear direction will be expected prior to today’s US NFP release.
The US job report is always seen as one the biggest market movers by traders, as it’s expected to provide more hints on how the US economy is coping with the current tighter liquidity environment sparked by the latest hawkish switch from the Federal Reserve.
Investors and analysts bet on a +225K jobs created in September, the lowest figure in almost two years, while the previous one for August showed +315K.
Any number outside of the +225K / +315K range would be likely to increase market volatility significantly, and could even bring a new direction to the markets depending on how it might impact the current monetary policy from the Fed.
Pierre Veyret– Technical analyst, ActivTrades
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