The Market Week – August Week 1
Another volatile week to start the month; USD remains pressured as economic data reports are mixed, Equities hit all-time highs again supported by strong earnings and US treasuries hold onto their strong demand as yields sink. All eyes now on the BOE (Thursday) and NFP & Canadian Jobs data (Friday).
It’s NFP week so jobs, earnings and unemployment take centre stage. The weekly US unemployment claims missed expectations again, coming in at 400,000, with 382,000 expected this week. NFP is expected to be around 870,000 and unemployment to drop to 5.7%. Although the data continues to trend lower overall, it is a very choppy ride for the long term unemployed.
The vaccine rollouts continue to drive sentiment, but the Delta variant remains a significant concern. A surge of cases in the US and China spooked markets earlier in the week, but upticks in vaccination rates in some key US states calmed worries. Over 4.26 billion doses of vaccines have been administered globally but many low-income countries have less than 5% vaccination rates, and the death toll now exceeds 4.2 million.
This week FX volatility was evident again. The USDIndex slipped to 91.75 and struggles to hold 92.00, and EURUSD tested up to 1.1900 before slipping back to 1.1850, while USDJPY declined as low as 108.85 before recovering to 109.20. Cable rallied to 1.3985, then cooled to 1.3850 but holds over 1.3900 ahead of the BOE on Thursday.
US stock markets posted more new all-time highs and continue to consolidate at highs on the back of the strong Q2 Earnings Season, which has over 88% of companies outperforming expectations. The USA500 holds over 4,400, the USA30 over 35,000 and the USA100 over 15,000.
The Gold price moved up this week as the USD remained pressured and US Treasuries in demand. The price held over $1800, posting highs at $1832 and lows at $1806. The 20-day moving average is up to $1809.
USOil prices had a volatile week, as missile exchanges in the Gulf and tanker hijackings crept back into the news. A spike to $73.50 was followed by a quick dip to $68.60 before recovering the key $70.00 handle ahead of the EIA weekly inventories later today.
The yield on the US 10-Year Treasury Note remains very much in focus. A weekly low of 1.15% on Monday provided a weak support as the rate remains below 1.20% at 1.18%, just above the July low at 1.13% ahead of the NFP data on Friday.
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Stuart Cowell
Head Market Analyst
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