September 7: Friday close and Weekend Wrap

September 7: Friday close and Weekend Wrap

Key Points:

US NFP and unemployment rate beat expectations

Volatile stock market sell off before solid retracement

WTI falls 4% on the day

The better than expected NFP print of 1.371m vs 1.35m expected and an improvement in the unemployment rate from 10.2% to 8.4% stole the headlines but made way for a mixed trading session ahead. All three US indices remained under pressure with the Nasdaq adding another 1.27% loss on the day which looks good as at one point it was down 5% and the S&P500 down 3% as markets digested comments from Powell about the economy that reinforced that the Fed are on hold for now and markets shouldn’t expect anything at the September meeting. A decent bounce back made the final prints look less frightening. The greenback also had a mixed session gaining on the initial NFP print but then giving back later into the day. The strongest currency on the day was the CAD which is surprising given the 4% slump in Oil prices and the rise in US 10 year yields. Overall AUD, EUR and GBP finished the day virtually unchanged. The weekends press has been focusing on Brexit talks again with the UK giving the EU an Oct 15 deadline to finalise the separation from Jan 1 2021. We’ve heard these threats many times before over the past 4 years. Cable has dipped on the open in Asia this morning and may see some further pressure when the European session opens later depending on how markets interpret these comments. Also for Australia, Victoria remains in lockdown with a further slow 6 week unwind ahead likely to impact the Australian economy further but no response in the currency so far. Recent price moves have been more dictated by external influence rather than domestic. Coronavirus cases across Europe are creeping up for a ‘second wave’ with the UK announcing almost 3000 new cases yesterday. A public holiday in US and Canada today will give markets a break from the recent volatility in the stock markets so we should be in for a relatively quiet day. For the upcoming Asian session we see Chinese trade data as the highlight.

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