MORNING OVERVIEW
The US Employment data for August is set to be released during today’s American trading session. The data is set to garner significant attention as it will be the last employment report prior to the Fed’s interest rate decision on the 15th of September. Thus, the financial release gains even greater importance in dictating the direction of the greenback today. In Asia, Japan’s household spending rate for July came in lower than expected, implying a reduction in consumption, which could possibly weigh on the JPY. Lastly, Canada’s employment data may be of interest for market participants.
The objective: Today’s objective is to prepare for the US Employment data
MARKET SNAPSHOT
| MARKET | CURRENT | CHANGE | COMMENT |
| S&P 500 | 7749 | +0.02% | To be influenced by NFP |
| DXY | 99.033 | +0.13 | All eyes on the US Employment data |
| EUR/USD | 1.16265 | +0.01% | Wait and see pattern till NFP |
| Gold | 4467.53 | -0.13% | Dovish comments by Fed Waller |
| Brent Crude | 95.760 | +0.25% | Geopolitical tensions remain elavated |
KEY MARKET THEMES
01 — US Employment data for August due out today
The US Employment data is set to be released during today’s American trading session. We are looking at three releases, which are the NFP figure, the Average hourly earnings rate and of course the unemployment rate. The Non-Farm Payrols figure is expected to showcase an improvement from -23k to 55k, which in turn could support the dollar. On the other hand, the unemployment rate is anticipated to remain steady at 4.1% whilst the average hourly earnings are expected to come in at 3.0% which is lower than the prior rate of 3.2%. Thus, the overall picture paints a mixed labour market. Nonetheless, emphasis may be on the NFP figure as it is notoriously known to exceed or underperform the market’s expectations.
Market implication (USD): Mixed
02 — Canada’s Employment data for August
Canada’s Employment data for August is set to be released during today’s American session and may be of interest to Loonie traders. As things stand, economists are anticipating the employment change figure to come in at 15k which could be lower than the prior figure of 75.1k, whilst the unemployment rate is set to remain steady at 6.4%. Overall, should the financial release showcase a loosening of Canada’s labour market, it may weigh on the CAD and vice versa.
Market implication (CAD): Bearish
03 — US Vice President Vance says all options are on the table against Iran
Tensions between the US and Iran have continued to escalate, with Iran attacking US military bases in Kuwait. The continued tit-for-tat attacks between the two nations. Thus when asked about the ongoing conflict by Journalist, US Vice President Vance noted that “everything” is on the table in order to pressure the Iranian government. Overall, should tensions continue, oil prices may find continued support.
Market implication (OIL): Bullish
WHAT MATTERS TODAY
US Non-Farm Payrolls figure
- Time (GMT+2): 15:30
- Expected: 56k
- Previous: -23k
Showcases the state of the US labour market
Potential market reaction:
Based on the expectations by economists, the financial release could provide support for the dollar.
US Unemployment rate
- Time (GMT+2): 15:30
- Expected: 4.2%
- Previous: 4.2%
Showcases the state of the US labour market
Potential market reaction:
A failure to reduce the unemployment rate may in turn weigh on the greenback.
Canada’s Unemployment rate
Time (GMT+2): 15:30
Expected: 6.4%
Previous: 6.4%
Showcases the state of the Canadian labour market
Potential market reaction
Should the unemployment rate fail to showcase an improvement it may imply a loosening labour market, which could weigh on the CAD.
ASSET FOCUS
[GOLD / COMMODITIES]
KEY LEVELS
- Resistance (R1): 4520
- Resistance (R2): 4695
- Support (S1): 4330
- Support (S2): 4180
Technical / Fundamental View: NEUTRAL
CROSS-ASSET VIEW
| ASSET CLASS | BIAS | KEY DRIVER |
| Equities | Neutral | US Employment data |
| Rates | Neutral | US Employment data |
| USD | Neutral | US Employment data |
| Gold | Neutral | US Employment data |
| Oil | Bullish | Geopolitical tensions |
TRADING SPHERE VIEW
Our base case: A greater than expected figure in terms of the NFP figure, may provide support for the dollar.
What would change our view:
A lower than expected figure in terms of the Non-Farm-Payrolls financial release
TODAY’S WATCHLIST
01 [US Employment data]
02 [Canadian Employment data]
03 [Canada’s Ivey PMI figure]
04 [Geopolitical developments]
Disclaimer:
This information is not considered as investment advice or investment recommendation but instead a marketing communication.
