Nervous Start to a Big Week Ahead
Asian markets have opened the week on the back foot as investors look ahead to a big data week and trade from a more defensive outlook. The major US indices had a mixed day on Friday, the Dow dropping 0.47%, the S&P 0.27% and the Nasdaq rising 0.14% – and there had been a bit of relief that the US has, again, avoided a government shutdown, but the overall sentiment still seems to favour the downside. FX markets had a reasonably quiet day on Friday and the dollar remains bid as do US treasury yields, notable moves again with the greenback moving higher was USDJPY on the approach to 150 and Gold which took another step lower on Friday, now trading under $1,850/oz.
Jobs Data Key in the Week Ahead
It’s a big week for US data this week with no less than 4 separate job market data updates due out. The FOMC has made it clear that they feel that the US job market needs to cool for inflation to move down towards levels that they will be more comfortable with and hence the focus on the upcoming data is even more intense than usual. As usual, the big number will come on Friday in the form of the non-farm numbers and unemployment rate but the JOLTS, ADP non-farms and week unemployment claims data all have a role to play, and we could see significant moves around their releases. Essentially, anything showing a cooling in the market should lead to some relief for risk trades, however, unless it shows a dramatic change in outlook, expect these rallies to remain good selling opportunities.
Thin Liquidity Trading Conditions Ahead Today
There are some key bank holidays across financial markets today which could lead to thinner liquidity trading conditions in the sessions ahead. China is celebrating Golden Week, and this will hit APAC markets for the next 5 days adding to this today is the fact that Australian banks will be closed for Labour Day today. There is little on the event calendars in both the APAC and European calendars, but the US Day does have a couple of risk events scheduled with the ISM Manufacturing PMI data set to come out and Fed Chais Jerome Powell due to speak later in the day. Canadian markets will also be shut however as they also have a bank holiday.
