Today's stock and macro update: Strong NFP causing confusion? USD strength killing of EM

Nick Batsford, CEO of Tip TV, was joined by Zak Mir, technical analyst for Zak’s Traders Café, on the Tip TV Finance Show to discuss the strong non-farm payroll number and emerging markets, as well as views on Gold, the Dollar Index and the USD.

Confusion as a result of the NFP

Mir outlined that the fantastic and unexpectedly high non-farm payroll number may have caused a wrong move and confusion, as it supposedly makes it December Fed rate hike more certain, investors are having to factor that in to their portfolios, thus causing minor confusion in the markets.

Gold double bottom or downtrend continues?

Batsford highlighted FX Street, who noted that following the strong NFP number, markets are now debating whether the Fed interest rate hike in December will be by 10 or 25 basis points. They continued that Gold could form a double bottom around USD 1070. FX Street added that the Fed are likely to hint at a much slower pace of tightening, which would be positive for Gold. Batsford commented that Gold fell as the Dollar strengthened, testing primary support at $1100/ounce, however, following through $1080 would signal another decline towards $1000/ounce.

Dollar Index to 107

Batsford believed that the Dollar strengthened in response to rising yields, breaking resistance at 98. He continued that the breakout above 100 would confirm another advance, with the Dollar Index targeting 107.

EUR/USD to parity?

According to Goldman Sachs, the EUR/USD pair is predicted to fall to parity by the end of 2015, meaning a massive 6 week breakdown of the Euro.

Falling growth forecast based on EM slowdown

Batsford noted Elliott, who commented that yesterday the Organisation of Economic Co-operation and Development cut this year’s forecast growth to 2.9% and trimmed next year’s to 3.3% citing a ‘deeply concerning’ slowdown in emerging markets. Overnight credit rating agency Moody’s published its global macro outlook saying, ‘global economic growth will not support significant reductions in government debt or increases in interest rates by major central banks. As a result the authorities lack the ample fiscal and monetary policy buffers usually created at the top of the business cycle, leaving growth and global financial stability particularly vulnerable to shocks for an extended period of time.’ Mir added that if the USD keeps strengthening, it will further damage emerging markets.