Key News:
USA - Average Hourly Earnings (MoM) (Jul)
USA - Nonfarm Payrolls (Jul)
USA - Unemployment Rate (Jul)
Canada - Employment Change (Jul)
Canada - Unemployment Rate (Jul)
European markets faced a challenging day yesterday, witnessing a continuation of losses. The DAX marked its fourth consecutive day of decline, while the FTSE100 closed lower for the third straight session. Despite the persistent downward trend, there was a glimmer of hope as both indices managed to recover slightly from their day's lows, suggesting a hint of resilience in the market.
DAX indices H4 chart
FTSE100 indices daily chart
In the US, the trend of market declines continued for the third consecutive day. Despite the US dollar reaching a fresh four-week high, it ended the day unchanged. The Dow also closed lower on Thursday, influenced by rising Treasury yields reaching multi-month highs. This increase in yields dampened investor sentiment as they awaited the upcoming jobs report scheduled for release on Friday.
Dow Jones Industrial Average Index daily chart
Despite positive earnings reports from tech giants Apple and Amazon after the market's close, market sentiment hasn't seen a notable surge as we approach the weekend.
One potential factor contributing to this week's market weakness is the recent Fitch downgrade of the US AAA rating to AA+. While the downgrade itself didn't provide any new information, it might have impacted investor confidence. Nevertheless, the overall state of the US economy appears to be robust, with the services sector showing resilience, even amidst concerns about the manufacturing sector.
The July ISM survey further demonstrated the economy's strength, with a solid performance. Prices paid increased, indicating ongoing inflation concerns, which may result in sustained elevated interest rates for an extended period. The employment component of the survey, however, ticked lower, suggesting potential cautiousness in hiring practices.
Despite these factors, the market sentiment remains cautious as the weekend approaches. Investors are likely to keep a close eye on any developments that could impact the overall market outlook going forward.
US nonfarm payrolls
The focus of the day lies on the release of the July jobs report in the US, which comes after the recent 25 basis points rate hike by the Federal Reserve, possibly the final hike of the current cycle. Market expectations are for the report to highlight the continued strength and resilience of the US economy.
Analysts anticipate the addition of approximately 200,000 jobs to the US economy, with the unemployment rate remaining steady at 3.6%. However, there might be a slight dip in average hourly earnings, dropping from 4.4% to 4.2%.
Meanwhile, Canada's jobs report is also expected to show robust numbers, following the addition of 59,000 jobs in June.
The pound experienced a volatile trading day yesterday, touching a one-month low before staging a strong rebound to finish unchanged.
The Bank of England's recent decision to raise interest rates by 25 basis points, bringing them to a new 15-year high, has raised some questions. There are indications that rates might stay at their current levels for an extended period. Comments from Deputy Governor Ben Broadbent have suggested that the UK's rate policy is already restrictive and that interest rates might now be above the neutral rate. Future rate hike decisions will likely depend on the upcoming CPI inflation reports, with the first one due in under two weeks.
In the forex market, the GBP/USD pair is showing a positive outlook, breaking a four-day losing streak during the early Asian session on Friday.
GBP/USD daily chart
Today, gold prices saw a modest rise as traders exercised caution in anticipation of the release of crucial labor data that could have an impact on US monetary policy decisions. The market remains watchful, and the outcome of the labor data is likely to influence investor sentiment and the direction of gold prices in the near term.
XAU/USD daily chart
Earlier this week, the price of gold experienced a notable decline, primarily driven by concerns surrounding a potentially hawkish stance from the Federal Reserve, which in turn strengthened the US dollar. As the market perceived the US economy to exhibit resilience, expectations of further interest rate hikes by the Federal Reserve increased, with the belief that there is ample room for additional economic adjustments. These factors have played a significant role in shaping the recent movements of gold prices in the market.
USA - Average Hourly Earnings (MoM) (Jul)
USA - Nonfarm Payrolls (Jul)
USA - Unemployment Rate (Jul)
Canada - Employment Change (Jul)
Canada - Unemployment Rate (Jul)
European markets faced a challenging day yesterday, witnessing a continuation of losses. The DAX marked its fourth consecutive day of decline, while the FTSE100 closed lower for the third straight session. Despite the persistent downward trend, there was a glimmer of hope as both indices managed to recover slightly from their day's lows, suggesting a hint of resilience in the market.
In the US, the trend of market declines continued for the third consecutive day. Despite the US dollar reaching a fresh four-week high, it ended the day unchanged. The Dow also closed lower on Thursday, influenced by rising Treasury yields reaching multi-month highs. This increase in yields dampened investor sentiment as they awaited the upcoming jobs report scheduled for release on Friday.
Despite positive earnings reports from tech giants Apple and Amazon after the market's close, market sentiment hasn't seen a notable surge as we approach the weekend.
One potential factor contributing to this week's market weakness is the recent Fitch downgrade of the US AAA rating to AA+. While the downgrade itself didn't provide any new information, it might have impacted investor confidence. Nevertheless, the overall state of the US economy appears to be robust, with the services sector showing resilience, even amidst concerns about the manufacturing sector.
The July ISM survey further demonstrated the economy's strength, with a solid performance. Prices paid increased, indicating ongoing inflation concerns, which may result in sustained elevated interest rates for an extended period. The employment component of the survey, however, ticked lower, suggesting potential cautiousness in hiring practices.
Despite these factors, the market sentiment remains cautious as the weekend approaches. Investors are likely to keep a close eye on any developments that could impact the overall market outlook going forward.
The focus of the day lies on the release of the July jobs report in the US, which comes after the recent 25 basis points rate hike by the Federal Reserve, possibly the final hike of the current cycle. Market expectations are for the report to highlight the continued strength and resilience of the US economy.
Analysts anticipate the addition of approximately 200,000 jobs to the US economy, with the unemployment rate remaining steady at 3.6%. However, there might be a slight dip in average hourly earnings, dropping from 4.4% to 4.2%.
Meanwhile, Canada's jobs report is also expected to show robust numbers, following the addition of 59,000 jobs in June.
The pound experienced a volatile trading day yesterday, touching a one-month low before staging a strong rebound to finish unchanged.
The Bank of England's recent decision to raise interest rates by 25 basis points, bringing them to a new 15-year high, has raised some questions. There are indications that rates might stay at their current levels for an extended period. Comments from Deputy Governor Ben Broadbent have suggested that the UK's rate policy is already restrictive and that interest rates might now be above the neutral rate. Future rate hike decisions will likely depend on the upcoming CPI inflation reports, with the first one due in under two weeks.
In the forex market, the GBP/USD pair is showing a positive outlook, breaking a four-day losing streak during the early Asian session on Friday.
Today, gold prices saw a modest rise as traders exercised caution in anticipation of the release of crucial labor data that could have an impact on US monetary policy decisions. The market remains watchful, and the outcome of the labor data is likely to influence investor sentiment and the direction of gold prices in the near term.
Earlier this week, the price of gold experienced a notable decline, primarily driven by concerns surrounding a potentially hawkish stance from the Federal Reserve, which in turn strengthened the US dollar. As the market perceived the US economy to exhibit resilience, expectations of further interest rate hikes by the Federal Reserve increased, with the belief that there is ample room for additional economic adjustments. These factors have played a significant role in shaping the recent movements of gold prices in the market.
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