Daily Market Commentary

The big miss on Friday’s Non-Farm Payroll number, (adding 114,000 jobs v an expected 185,000), triggered further sell-offs in US and European equity markets. This followed big losses from the previous session, with fears the US economy may well be headed into a recession. The NASDAQ has shed more than 10%, in this current sell-off, which is technically now a ‘correction’. Bond Yields are falling, following rate cuts from the ECB and Bank of England, while the Fed has indicated it may well follow suit, in September. The recessionary pressures are screaming out for interest rate relief, not to mention debt servicing abilities at these elevated levels, considering record deficits and debt. The heat is on Central Banks to interrupt the European recession, and the looming recession, in the USA. The Bank of Japan has raised rates, moving in the opposite direction of most Western Central Banks, as the currency is under extreme pressure and inflation is taking hold. If these dramatic falls continue into August, then tensions and fears will rise. The US Dollar remains a safety play, reflected in the fall of the EUR, which has slipped back below 1.0800.

Commodity currencies look for some consolidation, with the AUD looking to regain 0.6500, while the NZD has fared well, jumping to 0.5950. This coming week will focus on PMI data from Asia, Europe and the US. Trade data and inflation will also be closely followed, with a spotlight on Chinese economic data, driving commodity prices and currencies.