Europe surges and dollar slumps following payrolls data

A weaker payrolls reading has pushed European indices higher and driven the dollar into reverse, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

European markets surge

It might the US that’s looking forward to a long weekend, but European markets have got in on the act today following the payrolls data. The weaker figure sent the dollar reeling and saw Fed rate hike bets reined in. As a result, the Vix slumped and European markets took off, most notably the Dax, which saw its first record high in six months. Kevin Warsh’s hawkish talk has caught the market on the hop, and so any sign that the Fed may not have to rush to increase borrowing costs naturally spells good news for equities around the globe. The Dow has reached a record high too, but pricey tech stocks continue their disappointing start to Q3.

A bottom for gold?

Gold bugs have been glad to see the back of Q2 after the relentless selling, and Q3 has started on a much better note thanks to the staunch defence of $4000. A weaker dollar makes life much easier for the dip buyers, though sentiment has been heavily battered by the repeated false dawns of the long retreat from $5000. The worst quarterly loss in over decade has certainly taken the froth out of gold (and its cheaper cousin silver), and with inflation expectations dropping back the outlook seems much more promising than in the past three months.