Stocks seesaw after red hot US jobs report

Chris Beauchamp IG

The US economy is still firing on all cylinders if today’s jobs report is anything to go by, pointing the way to more rate increases this year.

Stocks shrug off strong US jobs report

“Equities wobbled in the wake of today’s US jobs report, but have managed to stabilise during the course of the afternoon, suggesting that this bear market bounce is not doomed yet. The solid jobs number, falling unemployment rate and rising wage figures show that the US economy, unlike many others, continues to strengthen, even as the Fed ratchets up its tightening programme. Thus it appears that the Fed can push on yet further, putting another 75 bps rise in play for September. This has put new fight into the dollar, but equities have seen the positive side too, shrugging off losses on hopes that the US consumer can remain resilient too.”

US still strong but recession concerns remain

“While America might be in good shape, the rest of the world is worse off, and this risks pulling the USA into a recession in spite of good US data. Sterling in particular seems likely to weaken further as the disparity between the US and UK grows wider. Further drops for sterling will counter much of the BoE’s efforts to control inflation, leaving yesterday’s gloomy outlook firmly in place.”

Author

Chris Beauchamp

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold hangs near one-week low; looks to FOMC Minutes for fresh impetus

Gold is consolidating just above the $4,850 level, having touched a one-week low on Tuesday, amid mixed cues. Signs of progress in US–Iran talks dent demand for the traditional safe-haven bullion. Meanwhile, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders also seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.