Last Friday, we witnessed an exceptionally strong report on the US labor market. Yes, unemployment did not reduce to a record level of 3.8% as anticipated, however a strong boost in the non-agricultural sector by 201,000, which leveled the joblessness data because of the wage growth. After all, joblessness has not increased, but stayed at the same level.
Eurozone, on the contrary, disappointed with slowing the GDP by 0.1% on a yearly basis, commercial production in Germany entirely went into the red zone.
Today, the most volatile news will begin to come out from Wednesday. The Federal Reserve will release its “Beige Book”, where the financier discovers the plans of the American regulator for the future. On Thursday, a conference of EU financial ministers will occur, after lunch the ECB will announce a choice on the rate of interest.
Given that nobody anticipates changes, the key motorist will be the speech by the President of the European Central Bank, Mario Draghi, who will speak at an interview at 15:30 Moscow time. Investors are very thinking about the question of QE, whether the ECB will continue the program for Italy in the light of recent developments.
Italy is currently the primary threat for the euro, although the new government has actually assured that it will embrace the nation’s spending plan within the framework of EU regulations. The agents of Italy will listen especially carefully.
By the end of five-day trading duration, there will be two essential news for the primary set. The level of earnings in the EU for the 2nd quarter and the base index of retail sales in the United States.
As we understand, the growth of salaries increases the paying capabilities of the population, which eventually nudges inflation, which stubbornly does not wish to grow. Retail sales are among the primary indications of GDP growth, and GDP is a sign of health of the economy.
The closer the Federal Reserve conference on the rates of interest, the more unpredictable and interesting the market becomes.
MARKET REVIEW SEP 10 – SEP 14
The UK will please us with the unpredictable news of this week. Immediately on Monday, while the currency-competitors “digest” a strong report on the United States labor market.
On the opening of the European trading session, Great Britain will discuss its GDP, the volumes of industrial production and production in the manufacturing market. In general, naturally, the favorable is not enough, but the release better than expectations will definitely support the pound sterling, which is not the very first week under the pressure of Brexit.
On Tuesday, Britain will report the labor market. The average level of wages thinking about premiums, where development is expected to be 0.1%, which is good.
The modification in the number of applications for welfare is also expected to decrease. Work, unfortunately for the pound, will likewise decrease, but unemployment will remain at the very same low level of 4.0%. It is worth keeping in mind that unemployment last time was at such a low level was way back in 1975.
A meeting of the Bank of England will be hung on Thursday. The regulator will reveal the choice on the rates of interest. No changes are expected, all members of the bank’s board will vote to conserve the existing rate (as anticipated).
Maybe the primary event of this day will be the accompanying declaration of the Governor of Bachelor’s Degree Mark Carney, which will be held on Friday. The governor will notify about the vision of the Reserve bank and the nearest potential customers for the development of monetary policy.
MARKET EVALUATION SEP 10 – SEP 14
The green continent likewise deserves attention on this five-day occasion. Australia surprised everyone with a record, for the past four years (specifically), GDP development of 3.4%. Today, we discover the business confidence from NAB on Tuesday, and the customer sentiment from Westpac on Wednesday.
In addition, on Thursday, Australia’s labor market will generate a report. The employment level is expected to emerge from the red zone, joblessness on the other hand, will stay at a low level of 5.3%. Modification in full employment will know later.
In general, we can state that the Australia raised its head, but is not yet all set for a counterattack. The reason for this is of course the United States trade war with China. The intention to push the US president, Donald Trump, on the PRC has a negative influence on partner countries.
Speaking on Friday on BBC, Trump said that the administration currently prepared tariffs for extra Chinese goods worth a total of 267 billion dollars. The more escalation of the trade conflict in between the two most powerful economies will continue to press the emerging markets and, lastly, the partner countries of the People’s Republic of China.
MARKET REVIEW SEP 10 – SEP 14
In the energy market, the tension is subsiding. Assistance for the rate of oil this week will be the start of the typhoon/ storm season, so on Friday yet another typhoon, “Florence”, was born. Over the weekend, it gained strength and is approaching the eastern coast of the United States. Presently, meteorologists do not attempt mention its power; just approximate figures of 1-3 points (wind speeds of as much as 150 km/ h).
This “bad weather condition” can make modifications in the supply of basic materials, because in the US logistics of raw materials take place primarily by land transportation. Another plus to the rate boost from the US is a decrease in drilling activity. Therefore, last Friday Baker Hughes reported the decrease of drilling rigs by 2 pieces.
The next factor in preserving costs is the clash of conflicting armed groups in Libya, which can also result in disturbances in the supply of basic materials.
Finally, the primary deterrent to the growth in the price of black gold is the additional escalation of the US trade conflict with China. As we have stated, the administration of the American president has actually planned extra tariffs on Chinese goods worth $ 267 billion. That can decrease the need for fuel.
Furthermore, this dispute makes the US dollar a defensive-asset, provoking its development to rival currencies, which in consequence makes raw materials more costly for emerging markets. As a result, once again lowering demand. Carefully follow the news, both geopolitical and the weather report!