Europe After what has been a uniformly negative week, today’s US payrolls report has served to offer a brief respite to markets with a solid but not spectacular set of numbers, although the unemployment rate did see an increase from 3.5% to 3.7%. Today’s gains have been broad based with today’s outperformers including the likes of Abrdn, which appears to be enjoying some buying interest ahead of what is likely to be its eviction from the FTSE100 at the next reshuffle in what has been a disappointing year to date for the asset management sector. St. James Place is also having a positive day, after the shares hit their lowest levels since December 2020 earlier this week. The energy sector is also getting a lift on the back of a rebound in oil prices, with BP leading the way, and Shell shrugging off reports that CEO Ben Van Beurden is stepping down next year, after 40 years at the company. The DAX has been a notable strong performer, led by the auto and manufacturing sector. Today’s worst performers on the FTSE100 have been the house builders on the back of a downgrade from HSBC.   With the share prices of Berkeley Group, Persimmon, Taylor Wimpey and Barratt Developments already back at their post lockdown lows, and down between 30% and 50% year to date, today’s action does appear to have all the hallmarks of a horse stable door moment. HSBC has cited concerns over the cost of living, and rising interest rates on the durability of the housing market, which could result in a “plunge” in housing demand and lower prices. Judging by the share price performance seen over the last 12 months one has to ask as to whether these concerns aren’t already priced in?   US US markets opened higher after what can only be described as a respectable jobs report for August, which saw 315k jobs added. Given the negativity this week and the US Labour Day long weekend coming up, this afternoon’s numbers have helped give markets a short-term lift, and prompted an element of short-covering, bargain hunting, however you want to describe it, with the US economy continuing to look resilient, as more workers return to the jobs market. With their share price close to the July lows, and the guidance downgrades from some of its peers Broadcom’s latest Q3 numbers had a low bar to clear, which it cleared with ease. When the company reported in Q2, its guidance for Q3 was for revenues to rise to $8.4bn, a rise of 24% from a year ago, and profits to come in at $8.3c a share. Yesterday’s numbers surpassed those expectations with revenues of $8.46bn and profits of $9.73c a share. For Q4 revenue is expected to rise to $8.9bn, while its order book has grown to $31bn with a 50-week lead time. FX Today’s US payrolls report saw the US economy add 315k jobs in August, while wage growth remained constant at 5.2%. Somewhat disappointingly the unemployment rate rose to 3.7% from 3.5%, however that was mainly due to a sharp rise in the participation rate from 62.1% to 62.4% which suggests that people are returning to the workforce due to the rising cost of living. This is exactly what you want to see, and while no-one wants the unemployment rate to rise it’s rising for the right reason, because people want to get back into work. This has prompted a little US dollar weakness today, however this is probably no more than profit taking at the end of a week, which has seen the greenback post 24-year peaks against the Japanese yen and 20-year highs on the US dollar index. This afternoon’s numbers also add to the idea that the US labour market remains tight and that a lot of these people will end up filling some of the 11.2m vacancies that are waiting to be filled in the US economy. It also means that the Federal Reserve is likely to press ahead with a 75bps rate hike when they next meet in September. The rebound in crude oil prices is also seeing the Norwegian Krone get an uplift at the end of a disappointing week. The euro is also getting a lift ahead of next week's ECB rate meeting, where it is expected we could see a 75bps rate rise.   Commodities Crude oil prices have continued to find support just above the $90 a barrel level which acted as a floor in August. This has come about through continued speculation that OPEC+ will look at cutting output if prices fall below the $90 a barrel level. The Saudi oil minister has previously gone on the record as saying that this could be an option if the demand outlook deteriorates further. This...

Today’s market summary The Dollar strengthening has reversed. US stock indexes futures are down currently. Brent is edging up presently ahead of G7 finance ministers virtual meeting today where they are expected to agree on plans to impose a price cap on Russian oil. Gold is edging up today. Top daily news Global stocks are subdued currently ahead of August US payrolls report today after SP500 snapped 4-session losing streak Thursday. Amazon shares gained 0.83% outperforming the market, Microsoft shares lost 0.44% Thursday while Britain's antitrust regulator said Microsoft’s $69 billion acquisition of "Call of Duty" maker Activision Blizzard could harm competition in gaming sector and it needs to be investigated in depth. Forex news Currency Pair Change EUR USD -0.5% GBP USD -0.48% USD JPY +0.03% AUD USD +0.21%   The Dollar strengthening has reversed currently. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, gained 0.7% Thursday while the US Bureau of Labor Statistics reported less Americans applied for initial jobless claims last week than expected while their number declined. EUR/USD joined GBP/USD’s accelerated sliding Thursday while the flash manufacturing PMI for euro zone was downgraded to 49.6 in the final reading from 49.7 initial estimate. Both euro and Pound are lower against the Dollar currently. USD/JPY accelerated its climbing yesterday while AUD/USD accelerated its retreating with the Australian dollar higher against the Greenback currently and yen little changed. Stock market news Indices Change Dow Jones Index -0.16% Nikkei Index -0.3% Hang Seng Index -0.88% Australian Stock Index -0.23%   US stock indexes futures are down currently ahead of August US nonfarm payrolls report at 14:30 CET with the yield on benchmark 10-year Treasury notes down at 3.259%. The SP500 and Dow closed higher yesterday with the three main benchmarks recording returns in the range of -0.3% to 0.5% while data showed economic activity in the manufacturing sector grew in August at steady pace. European stock market futures are lower today after ending down Thursday led by travel and leisure shares. Asian stock indexes futures are retreating currently with Chinese blue chips leading losses amid reports the southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents. Commodity market news Commodities Change Brent Crude Oil +1.89% WTI Crude +2.51%   Brent is edging up presently ahead of G7 finance ministers virtual meeting today where they are expected to agree on plans to impose a price cap on Russian oil. The price cap would deny London-brokered shipping insurance - which covers about 95% of the world's tanker fleet - and finance to cargoes priced above the cap. Prices ended down Thursday on concerns over new COVID-19 lockdown measures in China. The US oil benchmark West Texas Intermediate (WTI) dropped 3.3% but is higher currently. Brent crude lost 3.4% to $92.36 a barrel on Thursday. Gold market news Metals Change Gold +0.37%   Gold is edging up today. Spot gold fell 0.87% to $1696.09 on Thursday. Want to get more free analytics? Open Demo Account now to get daily news and analytical materials.

US Dollar: Sep '22 USD is Down at 109.315. Energies: Oct '22 Crude is Up at 88.58. Financials: The Dec '22 30 Year bond is Up 1 tick and trading at 133.19. Indices: The Sep '22 S&P 500 Emini ES contract is 4 ticks Higher and trading at 3969.75. Gold: The Dec'22 Gold contract is trading Up at 1717.30. Gold is 80 ticks Higher than its close. Initial conclusion This is not a correlated market. The dollar is Down, and Crude is Up which is normal, but the 30-year Bond is trading Higher. The Financials should always correlate with the US dollar such that if the dollar is lower, then the bonds should follow and vice-versa. The S&P is Higher, and Crude is trading Higher which is not correlated. Gold is trading Higher which is correlated with the US dollar trading Down. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. Asia is trading mainly Lower with the exception the Shanghai exchange which is fractionally Higher. Currently all of Europe is trading Higher. Possible challenges to traders today Average Hourly Earnings is out at 8:30 AM EST. This is Major. Non-Farm Employment Change is out at 8:30 AM EST. Major Unemployment Rate is out at 8:30 AM. This is Major. Factory Orders are out at 10 AM EST. Major. Treasuries Traders, please note that we've changed the Bond instrument from the 30 year (ZB) to the 10 year (ZN). They work exactly the same. We've elected to switch gears a bit and show correlation between the 10-year bond (ZN) and the S&P futures contract. The S&P contract is the Standard and Poor's, and the purpose is to show reverse correlation between the two instruments. Remember it's likened to a seesaw, when up goes up the other should go down and vice versa. Yesterday the ZN made its move at around 10:10 AM EST. The ZN hit a High at around that time and the S&P moved Higher shortly thereafter. If you look at the charts below ZN gave a signal at around 10:10 AM EST and the S&P moved Higher at around the same time. Look at the charts below and you'll see a pattern for both assets. ZN hit a Low at around 10:10 AM EST and the S&P was moving Higher shortly thereafter. These charts represent the newest version of MultiCharts and I've changed the timeframe to a 15-minute chart to display better. This represented a Short opportunity on the 10-year note, as a trader you could have netted about 20 ticks per contract on this trade. Each tick is worth $15.625. Please note: the front month for the ZN is now Dec '22. The S&P contract remains is Sep' 22 for the time being. I've changed the format to Renko Bars such that it may be more apparent and visible. Charts courtesy of MultiCharts built on an AMP platform ZN - Dec 2022 - 09/01/22 S&P - Sep 2022 - 09/01/22 Bias Yesterday we gave the markets a Neutral bias as we didn't see much in the way of correlation Thursday morning. The markets traded Mixed as the Dow gained 146 points and the S&P gained 12 but the Nasdaq dropped 31 points. Given that today is Jobs Friday our bias is Neutral. Could this change? Of Course. Remember anything can happen in a volatile market. Commentary Yesterday morning, as we reviewed the markets, the first thought crossing our minds, was "another down day." We didn't see much in the way of correlation, and we gave the markets a Neutral or Mixed bias. The markets closed Mixed as the Dow and S&P gained but the Nasdaq dropped. We were tempted to call this edition "Finally" as it took a week to finally close somewhat Higher. Today is Jobs Friday and as such our bias is Neutral and it is also Labor Day weekend, which means our next edition will be Tuesday. We always maintain a Neutral bias on Jobs Friday as historically speaking the markets have never had any sense of normalcy on that day. Could this change? Of course. Much of what happens today will be predicated upon the Jobs report out at 8:30 AM EST.

GBP/AUD sellers threw the pair into overdrive after hitting a wall of resistance near 1.70261 on the one-hour chart, which put it on the back foot. The pound sterling has fallen back below Thursday's lows against the Australian dollar as bearish sentiment has intensified, with bears testing the 1.69757 barrier. There is a chance that if they manage to break through this level, the price may continue to fall towards 1.69620. There is a possibility that the market can be sent even lower if this hurdle can be decisively broken, with more sellers aiming at 1.69224 and 1.699469. Alternatively, if buyers see the price in the range of 1.69757 as sufficiently attractive to step into the market, then this level may act as a support, holding the pair in the vicinity of the 50-EMA. It is also possible that buyers will find another opportunity to challenge the 1.70261, aligned with the 200-EMA.  According to the short-term momentum oscillators, selling pressure is picking up, with the RSI pulling out of the neutral zone and stepping into the selling area. In addition, shrinking MACD bars are also a sign that buying pressure is waning. While, momentum has not yet confirmed the bearish bias as it oscillates above the 100-level. 

Another euro zone's inflation report is noticeably above analysts' expectations. Eurozone data published on Friday afternoon showed producer price growth of 4% for July and 37.9% year-on-year. At the same time, analysts had expected a 2.5% m/m increase and a slowdown in the annual inflation rate to 35.8%. The fresh data set a new historical record, shattering the hopes we saw for the peak growth rate two months ago. Producer prices are a step ahead of consumer inflation, so it is unlikely that the pressure on final consumer prices will diminish in the coming months. Preliminary CPI estimates published for August confirm that the inflation spiral continues to unravel. Prices are, on average, 9.1% higher than in the same month a year earlier, almost half of which is due to a jump in energy prices. But there are two additional worrying factors. The first is the acceleration in core inflation to 4.3% y/y, indicating a breadth of inflationary pressures. The second is the drop in the unemployment rate to 6.6% (a historic low since at least 1994), which makes the price spiral even more dangerous. The combination of low unemployment, rising prices and a falling euro are sure companions of stagflation. In such an environment, it is not surprising that the ECB is becoming increasingly hawkish, convincing markets of its willingness to raise the rate by 75 points next week. This tightening of rhetoric has halted the sell-off in the euro. Even if the ECB achieves the same acceleration as the Fed with a 75-point rate hike next week, there would still be a considerable lag in terms of nominal rate levels and balance sheet dynamics. The Fed has to double the pace of asset sales from the balance sheet to 90 billion a month from September, while the ECB is not even considering such an option. On the fundamental analysis side, Fed policy and macroeconomic factors lean towards the current EURUSD stabilisation at parity being a temporary halt but not base support. The acceleration in ECB policy normalisation is making the euro fall more slowly, but not enough for a trend reversal.  

An action-packed week lies ahead, featuring central bank meetings in the Eurozone, Canada, and Australia, an output decision from the OPEC cartel, and the selection of the next UK prime minister. The ECB will likely steal the show, as policymakers seem prepared to roll out the big guns to defend the sinking euro.