Global Market Insights - Forex, Futures, Stocks

Dollar stands tall after robust jobs report

Broadcast on:: 07 Oct 2024
Audio Format:: other

Strong US data dent chances of a 50bps Fed rate cut. Plethora of Fed speakers on the wires today. Dollar enjoys strong gains, stocks rally unexpectedly. Oil pushes higher as gold’s retreat continues.

Risk Warning: Our services involve a significant risk and can result in the loss of your invested capital. *T&Cs apply.

Please consider our Risk Disclosure: https://www.xm.com/goto/risk/en

Risk warning is correct at the time of publication and may change. Please check our Risk Disclosure for an up to date risk warning

Receive your daily market and forex news analysis directly from experienced forex and market news analysts! Tune in here to stay updated on a daily basis: https://www.xm.com/weekly-forex-review-and-outlook

In-depth forex news analysis on all major currencies, such as EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD.

Welcome to another episode of Global Market Insights, brought to you by XM.com, where we provide meaningful and informative content about the events that affect market trends and shape global markets. It's Monday, October 7th. This is the Daily Comment at XM.com by Hiles Gertogolobolo, San Cristina Maruchas. Another exciting week commences as market participants are still digesting the unexpectedly strong U.S. labor market data. The plethora of upside surprises has crashed the chances of another 50 basis points rate cut at the November 7th meeting, with even the doves acknowledging the fact that the U.S. economy is confidently growing. We are likely to hear more on this issue this week, as more than 10 Fed members will be on the wire, starting with Kishkeri, Bostek, Miseleim and Balman today. Apart from the doves who will try to manage expectations after the strong U.S. data, it would be interesting to see how the Hawks handle the situation in terms of the need for another rate cut in November. Interestingly, the debate could become even more complicated if Thursday's September CPI report produces another upside surprise. The U.S. dollar was the main beneficiary of last Friday's data, as the Dollar Index recorded its strongest weekly performance in September 23rd, 2022, led by the correction in Euro Dollar, which at the time of writing is hovering below the key 110 level, and with Dollar Yen climbing abruptly above 148. While the Dollar's reaction was largely expect that the equities move, produce some question marks. Up to now, the positive market momentum was fueled by the expectations that the Fed will continue to ease its monetary policy stance. However, equities traded higher, as if the market shifted gear and was more interested in content with the underlying strength of the U.S. economy. This reaction was even more intriguing, as the news flow from the Middle East remained negative. Pointingly, over the weekend, both Israel and Iran's proxies continue their barrage of attacks with no end in sight. Today marks the one-year anniversary of Hamas' brutal attack in sight Israel, with Israel still pondering its response to last week's direct Iranian attack, which could even involve targeting Iran's nuclear facilities, negotiations for a temporary ceasefire, or a solution have broken down. Pressure from President Biden for some sort of agreement will continue, as such an outcome might also boost Harris' electoral chances. Indeed, we have entered that last stretch, as there are fewer than 30 days left for the election, which means the rhetoric from both sides is expected to become more aggressive. Oil continues its journey higher, temporarily surpassing the $76 level, and thus trading around 13% higher from its early September lows. This bullish move might have legs, as energy, oil, and gas installations are high on the target list for both sides in the Middle East conflict. On the flip side, the improved risk sentiment and the Dollar's gains have pushed gold below the $2,650 area. This is the fourth consecutive red-daily session for gold, but a more protracted correction needs sustainably good US data and a barrage of positive news regarding the Israel-Iran conflict. Until then, have a great week. [BLANK_AUDIO]