8 September, AtoZForex.com, Lagos – Friday’s NFP figures generally disappointed, falling short of broad forecasts. A strong report was expected to hint largely on rate hikes to come in September, but the disappointing 173k figure against forecast of 215k added to the confusion.
On the other hand, the unemployment rate fell more than expected and the average working week increased, as well as average hourly earnings continued to rise at the same annual pace as before.
The much-awaited NFP confused markets further, as it was expected to settle the question of whether the Fed would hike in September. Yet in the event they were neither good enough to guarantee that the Fed would move, nor bad enough to rule out a hike. In response, the U.S. stocks fell.
Source: Bloomberg, AtoZForex.com
Another influence factor on this matter was August data which gave little comfort to investors seeking clues on interest rates, amidst volatile global markets and growing concern about the economy’s strength.
For the FX markets, USD had a somewhat indecisive reaction on the events. First falling sharply, before bouncing higher and ended later the day somewhat indifferent. On the other hand, the S&P 500 erased 1.5 percent to 1,921.22 at 4 p.m. in New York.
The benchmark index slid 3.4 percent for the week, depicting its second-worst performance since December. The Dow Jones Industrial Average fell 272.38 points, or 1.7 percent, to 16,102.38. Equity markets will be closed Monday for Labor Day. Trading on U.S. exchanges was 10 percent below the three-month average.
On a different note, quite a number of the world’s 20 biggest economic financial leaders agreed on Saturday to beef up reform efforts, in order to prompt a positive push in the disappointing slow growth of the world economy. As ultra-low interest rates become insufficient to tackle the situation for inspiring the required acceleration in the economic expansion. Nonetheless, the G20 articulated their optimistic view to an eventual growth, which will result in the increase of interest rates for the advanced economies with the US as focus.
The communique of the G20 finance ministers and central bankers stated: “monetary policies will continue to support economic activity consistent with central banks mandates, but monetary policy alone cannot lead to balanced growth”. Further stating that: “We note that in line with the improving economic outlook, monetary policy tightening is more likely in some advance economies”.
For now, all eyes are on the Fed for making its next move in regards to rate hikes.
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