The USD had a rollercoaster ride on Friday after US NFP showed that only 151k jobs were added versus 180k forecasted. The USD initially experienced losses on the news, however managed to quickly recover and complete the week strong versus other major pairs. The Fed has actually been rather aggressive in its talks regarding the state of growth in the US economy, indicating a potential rate hike as early as September, however the actual jobs figure might derail its plans. This week features Central Bank Rate decisions from Canada, Australia and Europe.
Currencies: The market reaction on Friday shows that traders still expect a rate hike this year despite the weaker than expected NFP on Friday. Actual forecasts are at 21% opportunity of September hike, down from prior day’s 24%. opportunity of December hike likewise dropped to 50.6%, down from prior day’s 53.6%. The EUR/USD lost 0.64% in the last week. The single currency is trading at $1.1160 as the rally from earlier in the week boosted the USD. The under-performing NFP only sapped some energy from the direction of the move, however the USD managed to appreciate on a daily and weekly basis versus the EUR. Yen ended as the weakest major currency on expectation of BoJ easing in September.
Stocks: Stocks likewise closed the week mildly higher along with DJIA ended at 18491.96 while S&P 500 closed at 2179.98, staying in recent range. Meanwhile in Asia, stocks were broadly higher on Monday, as the weaker than expected US jobs data eased worries over an imminent rate increase from the FED. Higher interest rates in the U.S. increase the chances of foreign capital pulling from emerging markets.
Oil and Gold: OIL dropped 6% in the last 5 days. The price of oil was erratic in the last week of August as concerns along with overproduction, stronger USD and lower global growth forecasts combined versus the lukewarm efforts of the OPEC to bring down the price of oil. Despite a rebound in the USD after very first weakness on the release of a weaker-than-expected U.S. employment report, gold ended the week along with a rally from important support ($1308), closing the session along with a 0.73% gain. For the week overall, gold was marginally higher.