Daily Market Commentary 4th September 2023

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Non-Farm Payrolls missed expectations and Unemployment spiked up to 3.8% on Friday. The weaker employment data is exactly what the market was looking for, cooling labour markets, which will reduce the inflationary pressures on the economy. This was a good sign for the Fed, who have been waiting for the labour market to cool, to perhaps enable them to be able to hit the ‘pause button’ on interest rate rises. It was a ‘buy the rumour, sell the fact’ market trade, as other US employment reports (Jolts, ADP and Challenger), had all suggested this would be the case. Bond Yields popped back higher, as did the US Dollar. The EUR slipped back to trade below 1.0800, while the GBP fell below 1.2600.

Commodity currencies felt the impact of the harder reserve, with the AUD falling below 0.6450, while the NZD drifted back to 0.5940. Local markets will look closely at the latest RBA interest rate decision, next Tuesday, where they are expected to leave rates unchanged. It will all be about the Bank’s Commentary and how severe the inflationary warnings will be? Inflation and growth will remain the main themes in trading for the coming week. Chinese Trade data will be released, GDP growth numbers from the EU and Japan, while the Fed will release the latest rendition of their ‘Beige Book’. A busy week of global data releases and watch out for surprises to ‘move and shake’ the market direction for September.

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