Markets retreat as September stays on the cards


Heading into the close the FTSE 100 is down over 100 points, as September continues to look like a possibility for US rate hikes.

- Non-farms miss expectations, but wage growth rises and unemployment falls
- Data continues to point to a possible increase in rates in September
- Equities fall as dollar rises

This morning’s risk-averse mood has been justified by US job numbers this afternoon. Although the headline number missed expectations, a look beneath the bonnet revealed that wages were still growing, and at a faster-than-expected pace, while short-term unemployment was down. It is hardly surprising to see actual job growth slow, since the US economy is now close to ‘full employment’, and so the underlying figures take on greater importance. Overall, it looks like US data might still provide the rationale for a rate increase this month, although the decision is finely-poised. As such, I would not be surprised to see Janet Yellen and co split the difference, and opt for a 10 basis point move rather than the 25 point rise that is the standard expectation. In this way she could defend herself against claims both that she is asleep at the wheel and that the US economy is not ready for a full cycle of tightening just yet.

The new week will be complicated by two developments – a US bank holiday and the reopening of Chinese markets. The former could prompt a fairly dull session in Europe without US traders to lighten the mood, but the latter may see another selloff as Chinese investors return to the fray. China data during the week will also provide much-needed information on whether a further slump in equities is justified.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures