FOREX
After two sessions in the red, the US dollar is again on the front foot as Friday’s trading session begins in Europe. Later today, we’ll have the release of non-farm payrolls, which may end up playing the role of tiebreaker for a hesitating Federal Reserve. The US central bank’s stance has been mainly hawkish, dominated by the ‘higher-for-longer’ narrative, despite the recessionary risks associated with its tight monetary policy. Against this background, today’s employment data could be the decider; a strong reading is likely to tilt the scales towards another rate hike before the end of the year, in which case the greenback will likely strengthen further in relation to other major currencies. On the other hand, a clear sign of cooling down in the US labour market would likely force the Fed to pause, a scenario that may lead to dollar weakness.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares climbed on Friday, extending the gains registered by Asian benchmarks overnight, as investors brace for the latest US job report.
The STOXX-50 traded above the 4,100 pts level, led higher by most sectors, with financial shares registering the top performances as traders await hints on where monetary policies will go following the US NFP report due later this afternoon.
Most analysts and investors are already pricing in "disappointing" data for the US job market in September (prev. 187K vs. 170K expected), which will likely put pressure on the Fed to tighten the monetary supply further.
Market volatility is likely to increase as we get closer to this afternoon's data release time, and a significant spike in prices could even occur if the actual number comes outside the 170K/187K window.
Technically speaking, the STOXX-50 index still trades below its mid-term bearish trendline without clear direction in the short term, highlighting traders' wait-and-see stance.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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