The main event of the day is set to be the US employment data.
MORNING OVERVIEW
The US Employment data for September is set to be released today. The expectations are the data to showcase a loosening labour market, which could weigh on the dollar. Nonetheless, the NFP is notoriously difficult to predict, and thus the markets may be in for a ride today.
MARKET SNAPSHOT
| MARKET | CURRENT | CHANGE | COMMENT |
| S&P 500 | 7703 | +0.49% | US employment data |
| DXY | 101.95 | -0.14% | US employment data |
| EUR/USD | 1.1248 | +0.04% | US employment data |
| Gold | 4181 | +0.10% | US employment data |
| Brent Crude | 99.13 | -3.05% | N/A |
KEY MARKET THEMES
01 — US Employment data
The US Employment data for September is set to be released today. According to expectations by economists, the data is set to showcase a loosening labour market with the NFP figure expected to come in 90k which is lower than the prior figure of 162k and the unemployment rate is expected to remain steady at 4.1%. Nonetheless, the predominant sentiment is that a loosening labour market could lower the calls for a more aggressive stance by the Fed. In turn such a scenario could weigh on the dollar. Moreover, considering the cooler than expected inflation print earlier on this week for the US, a softening labour market could amplify the market’s sentiment.
Market implication (USD): Bearish
02 — Eurozone preliminary HICP rates due today
During today’s European trading session, the Eurozone’s preliminary HICP rates for September were released and came in hotter than expected on a headline level at 3.8% versus 3.7%. The hotter than expected inflation print showcases an uptick in inflation and could increase pressure on the ECB to continue on their tighter monetary policy path. In turn this could aid the EUR.
Market implication (EUR): Bullish
03 — Australian PMI figures next week
Australia’s final composite PMI figures for September are set to be released on Monday. The figures are final and thus aren’t really anticipated by economists to change, yet should the figures come in higher than expected it could provide support for the Aussie and vice versa.
Market implication (AUD) : Neutral
WHAT MATTERS TODAY
Eurozone headline preliminary CPI rates year-on-year for September
Time (GMT+2): 12:00
Actual: 3.80%
Expected: 3.7%
Previous: 3.2%
Potential market reaction:
Could support the EUR
Eurozone preliminary Core CPI rates year-on-year for September
Time (GMT+2): 12:00
Actual: 2.50%
Expected: 2.50%
Previous: 2.40%
Potential market reaction:
Could support the EUR
ASSET FOCUS
[Gold / Commodities]
XAU/USD appears to be moving in a downwards fashion with the commodity currently testing our 4200 (R1) resistance level. We opt for a bearish outlook for gold’s price and supporting our case is the MACD indicator below our chart and the RSI indicator as well which currently registers a figure below 50, implying some bearish tendencies. For our bearish outlook to continue we would require a break below our 4080 (S1) support level, with the next possible target for the bears being our 3945 (S2) support line. On the other hand, for a bullish outlook we would require a clear break above our 4200 (R1) resistance line with the next possible target for the bulls being our 4350 (R2) resistance level.
KEY LEVELS
- Resistance (R1): 4200
- Resistance (R2): 4350
- Support (S1): 4080
- Support (S2): 3945
Technical View: Bearish
CROSS-ASSET VIEW
| ASSET CLASS | BIAS | KEY DRIVER |
| US Equities | Bullish | US Employment data |
| USD | Bearish | US Employment data |
| Gold | Neutral | USD |
| Oil | Neutral | N/A |
TRADING SPHERE VIEW
Bullish for EUR
Our base case:
The Zone’s CPI rates came in hotter than expected which could provide support for the EUR
What would change our view:
Stronger than expected US Employment data.
RISKS TO THE VIEW
US Employment data
A stronger than expected US Employment data.
TODAY’S WATCHLIST
01 US Employment data
