MARKET BRIEFING – LONDON OPEN 05.10.2015
Friday’s dull afternoon was livened up considerably once the job data news was released. The data for the month of September reported that only 142,000 new jobs had been created. This report would have had the FOMC Chairwoman Janet Yellen scratching her head.
The market had been expecting Non-Farm Payroll Employment Change data post 201,000 new positions filled. This news sent the equity markets rallying and the US Dollar crashing.
In the further gloomy news, there was an expectation that the August release would be revised considerably higher. However much to the markets surprise, the revision was actually downwards with the Bureau of Labor Statistics announcing that there was in fact 59,000 fewer jobs created for the months of July and August.
There was also bad news on when it came to salaries with the Average Hourly Earnings number also missing expectation as it posted a decline to 0.0% versus market expectations of 0.2%.
The only bright spot on the horizon was the Unemployment Rate data which was reported as remaining at a low 5.1% for the second month in succession.
Friday’s jobs announcements round off a bad week for the US Labour market with Thursdays Unemployment Claims report that was released by the Department of Labor also disappointing the markets.
The September Jobs Report caught many market participants off guard would have would have shocked Janet Yellen and her fellow committee members on the Federal Reserve. However, there is also an undercurrent developing that the FOMC had knowledge that something was not totally healthy with the jobs picture. This would go a long way to explaining the overly dovish September, Federal Reserve meeting.
The main consequence of this stunning news has now seen the market price has pushed out the timing of an interest rate increase out to March 2016. Will the FOMC now still go ahead an increase interest rates in 2015? October now looks well and truly looks off the table. December could still happen but we now only have two months of data left for the Federal Reserve to consider. This means that there needs to be a rapid improvement in the data if the Federal Reserve is to act on interest rates this year.
With some much uncertainty surrounding the United States and global economy and with US jobs numbers looking extremely soft the obvious course of action the Federal Reserve to take is do nothing in 2015 as it increasingly appears that now is not the time to increase interest rates.
Furthermore, although market expectations should not dictate Federal Reserve policy, the pricing-in, of an interest rise for March 2016 would seem logical, as it gives Janet Yellen and her colleagues more data points to consider before they decide to increase interest rates.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.1335
Target 2: 1.1100
Projected range in ATR’s: 0.0117
Daily control level: 1.1145
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5305
Target 2: 1.5075
Projected range in ATR’s: 0.0116
Daily control level: 1.5105
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5305
Target 2: 1.5075
Projected range in ATR’s: 0.0116
Daily control level: 1.5105
USDCHF
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.9800
Target 2: 0.9610
Projected range in ATR’s: 0.0095
Daily control level: 0.9795
USDCAD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.3255
Target 2: 1.3040
Projected range in ATR’s: 0.0107
Daily control level: 1.3250
AUDUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.7135
Target 2: 0.6970
Projected range in ATR’s: 0.0084
Daily control level: 0.7000
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1154.00
Target 2: 1121.00
Projected range in ATR’s: 16.40
Daily control level: 1104.00
OIL
The intraday technical outlook
Trend 1 hour: Up
Target 1: 48.00
Target 2: 44.00
Projected range in ATR’s: 1.72
Daily control level: 44.20
MORE ON ACFXblog.com