Nervous markets ahead of US NFP and unemployment numbers
Markets remain on edge as traders await today’s key US nonfarm payrolls and unemployment data which is likely to dictate the upcoming Fed monetary policy decisions. Recent US data has shown a slowing labor market, but the economy remains reasonably resilient, and inflation, while cooling, is not falling off a cliff. Analysts are split 60% to 40% between a 25bps and 50bps rate cut by the Fed at this month’s FOMC meeting. Analysts are also still leaning toward a soft landing for the US economy which is seeing EM currencies like the Rand trade firmer over the last few days. The sell-off in global equity markets is continuing despite falling US bond yields and a pick-up in risk appetite. The Dollar has softened overnight and is currently quoted at 1.1118 and 1.3180 against the Euro and Pound, respectively, while the Yen is now at 142.75. The Yen has rallied quite sharply on the back of the rate cut hopes in the US and on some hawkish comments from Bank of Japan officials. The Rand ended 0.83% firmer at R17.7050 last night and is holding steady this morning. A softer US NFP number could see the Rand break below the R17.70 level and possibly have a run at the R17.50 long-term target.
Gold regains the $2,500 level as the Dollar softens
Gold is trading firmer at $2,520 this morning on the back of the US rate cut optimism and softer Dollar. Bets on deeper rate cuts by the Fed and some movement out of equities into Gold are currently providing support for the yellow metal. Platinum is up at $928 this morning but Palladium has fallen to $935. Brent crude is trading flat at $72.70 with a lower demand outlook and looming OPEC+ production increases continuing to weigh on the price.
