The first week of September will mark a pivotal period in the financial markets, as investors navigated through a mix of economic data, corporate news, and global developments.
With summer officially behind us, the focus shifted to how the economy is shaping up heading into the final quarter of the year.
KEY ECONOMIC INDICATORS
Crude oil prices surge:
Crude oil prices surged during the week, driven by concerns over supply disruptions and tightening inventories. OPEC+ announced a continuation of production cuts, which pushed prices higher.
The energy sector benefited from this price increase, with energy stocks outperforming the broader market.
Looking ahead
With the Federal Reserve’s next meeting on the horizon, the strong job market data and rising oil prices may influence the central bank’s decisions on interest rates.
The mixed signals from various sectors and regions suggest that markets could remain volatile in the coming weeks.
U.S. job market shows resilience (NFP)
The US Bureau of Labor Statistics (BLS) reported on the First Friday in August that nonfarm payrolls (NFP) rose 114,000 in July.
This reading followed the 179,000 increase (revised from 206,000) recorded in June and fell short of the market expectation of 175,000.
It has become clear recently that the jobs market is slowing, as it was before the massive 818,000 downward jobs revision by the Bureau of Labor Statistics, or BLS, last week. Job openings fell to a three-year low in June of this year.
Then we got the dismal July BLS Jobs report on August 5th. It showed only 114,000 positions were created during the month of July. This was far below the consensus estimate of 174,000 jobs. In addition, the June jobs number was revised down by 27,000 positions to 179,000.
CURRENCIES
BoC (Bank of Canada) interest rate decision
Over the past three years, Canada – like many countries around the world – has experienced high inflation for the first time in decades.
The annual rate of CPI inflation started rising in the spring of 2021 and reached a peak of 8.1 per cent in June 2022. Inflation has fallen considerably over the past 18 months. The inflation rate rose to 2.9 per cent in March, slightly up from 2.8 per cent in February, but still within the bank’s 1 per cent to 3 per cent target range.
USD/CAD
S1-S3 – Means potential Support points. If the market declines further, these are the potential levels it can reach.
R1-R3 – Means potential Resistance points. If the market starts to increase again, these are the potential levels it can reach.
NFP (Nonfarm Payroll)
The NFP Report is scheduled to be released this coming Friday, 06 September 2024.
Events since the last release of the Inventory Report:
US job growth revised down by 818,000
The Bureau of Labor Statistics’ recent revision showed that US job growth for the year ending in March 2024 was weaker than initially reported, with 818,000 fewer jobs added.
Upcoming BLS revisions could reveal slower US job growth
This new data might show that job growth was actually weaker than first reported. Economists think the number of jobs added could be revised down by 600,000 or more, meaning there were about 50,000 fewer jobs added each month on average.
US jobs growth slows sharply in July
The US economy added 114K jobs in July 2024, well below a downwardly revised 179K in June and forecasts of 175K. It is also the lowest level in three months, below the average monthly gain of 215K over the prior 12 months, signalling the labour market is in fact cooling off.
XAU/USD
Gold prices dip as PCE data looms; Set for strong August
Spot gold fell 0.3% to $2,514.55 an ounce
Gold futures expiring in December fell 0.5% to $2,547.80 an ounce by 01:08 ET (05:08 GMT).
Spot prices were set to gain about 2.8% in August after hitting a record high of $2,531.72 an ounce earlier in the month.
Among other precious metals, platinum and silver were mixed on Friday, but were vastly lagging gold through August.
Market instruments to look out for this week:
USD/CAD
EUR/USD
Nasdaq100
XAU/USD
S&P 500
NEWS HEADLINES
Annual PCE inflation unchanged at 2.5% in July – BEA
Overall annual U.S. inflation was unchanged in July, mainly cementing the U.S. Federal Reserve’s cut in interest rates in September.
According to data from the Bureau of Economic Analysis, the personal consumption expenditures (PCE) price index came in at 2.5% in July, unchanged from the prior month, and below the 2.6% expected.
Speaking at the Fed’s annual Jackson Hole symposium last week, Fed Chair Jerome Powell acknowledged recent progress on inflation and said that “the time has come for policy to adjust.”
Oil set for weekly gain on supply concerns
Brent crude futures for October delivery, which expire on Friday, were down 7 cents, or 0.09%, at $79.87 a barrel by 1041 GMT.
The more actively traded contract for November inched up 5 cents, or 0.06%, to $78.87.
U.S. West Texas Intermediate crude futures gained 6 cents, or 0.08%, to $75.97.
A day earlier, both benchmarks settled more than $1 higher and were up 1.1% and 1.6%, respectively, for the week so far.
Dollar set to snap 5-week losing run while yuan rallies
The dollar held steady near a one-week high versus major peers on Friday, on track to snap a five-week losing streak after robust economic data caused investors to pare bets on aggressive Federal Reserve interest rate cuts.
The U.S. dollar index was flat at 101.40 after rising 0.36% on Thursday and touching the highest since Aug. 22 at 101.58.
Traders see a September rate cut as a done deal but, after the data, laid only 34% odds of a 50-basis point cut, down from 38% a day earlier,
Spot yuan strengthened as far as 7.0825 per dollar before last changing hands at 7.0913, on track for a rise of around 2% for August.
