Investors are showing a preference for the euro and British pound on Friday as they eagerly await the release of the US employment report, which may shed light on the sustainability of hiring amid looming economic uncertainties. Nevertheless, the report’s ability to provide a clear direction for future Federal Reserve policy remains uncertain due to overlooked household financial conditions and ongoing labor strikes. Economists are predicting an increase of 173,000 jobs in September, but forthcoming data could reveal a significant deviation from these expectations, leading to mixed signals and heightened demand for risk assets.
The evolving dynamics within the labor market and fluctuations in average earnings could significantly influence the Federal Reserve’s forthcoming interest rate decisions. These considerations come against a backdrop of rising borrowing costs and a contracting labor market, which might compel policymakers to reevaluate their hawkish stance as they approach the end of the tightening cycle. The technical analysis of the EUR/USD currency pair suggests a growing appetite for the euro, with crucial support from major market players seen as essential for maintaining control at specific levels. Meanwhile, the GBP/USD remains uncertain until it reclaims control above 1.2190, potentially setting the stage for a rebound toward 1.2220, with the possibility of testing support at 1.2060.
In other market developments today, European stocks registered modest gains ahead of the US payrolls report, mirroring similar progress observed in Asian markets. The impending report is expected to reflect a slowdown in hiring during September, potentially alleviating pressure on the Federal Reserve to implement further interest rate hikes. The Stoxx 600 index saw miners leading the way as discussions between a Chinese iron-ore purchasing agency and global suppliers unfolded.
Energy stocks faced challenges, fueled by apprehensions about demand and Brent crude experiencing its most substantial weekly decline since March. Royal Philips NV’s shares declined by 8.5% following an agreement to conduct additional testing on specific devices. Despite minor losses in the Nasdaq 100 and S&P 500, US equity futures remained relatively stable.
The eagerly anticipated nonfarm payrolls report is projected to reveal that US employers added 170,000 workers in September, a decrease from the 187,000 added in August. This contrasted with the weaker-than-expected ADP employment report. Market participants, including Barclays Private Bank’s Chief Market Strategist Julien Lafargue, are closely monitoring wage growth data and job creation figures.
The 10-year Treasury yield held steady at 4.74%, with Societe Generale (OTC: SCGLY) strategist Kenneth Broux suggesting that upcoming payrolls data and inflation metrics, including CPI figures, will play a pivotal role in influencing its trajectory. Asian stock markets were buoyed by gains in Hong Kong’s Hang Seng Index and optimism surrounding Golden Week consumption trends. San Francisco Fed President Mary Daly hinted that the central bank may maintain the status quo on interest rates should inflation and the labor market cool down.
In the cryptocurrency realm, Bitcoin experienced a slight uptick, reaching $27,515.87, while Ether saw an increase to $1,624.19. The MSCI Emerging Markets Index surged by 0.7%.
