Forex news for September 3, 2021:
- US August non-farm payrolls +235K vs +750K expected
- ISM August services index 61.7 vs 61.5 expected
- US August final Markit services 55.1 vs 55.2 expected
- Baker Hughes oil rig count falls to 394 from 410 last week
- New York Fed suspends GDP Nowcast model
- FDA tells White House to scale back plans to offer boost shots
- SNB's Maechler: Can't rule out risk that long pandemic will affect confidence
- Democrats discussing tax on stock buybacks and excess CEO pay
Markets:
- US 10-year yields up 3 bps to 1.324%
- Gold up $19 to $1828
- WTI crude oil down 72-cents to $69.28
- S&P 500 flat at 4536
- AUD leads, USD lags
If you bet on ADP enough times, eventually you'll get it right. Not that ther ewas a big dollar move on the jobs report anyway. It was a sloppy reaction afterwards as FX looked to the counter-intuitive move in bonds initially in a whipsaw before the dollar eventually started a grind lower.
There are two theories on bonds 1) They're pricing in a concession ahead of supply next week 2) They're pricing out the chance of a policy error and a likelihood that the Fed keeps rates low enough to achieve real inflation. There's no real consensus.
The straight-forward moves in FX make a bit more sense with the front-end driving the price action and the growing chance that the Fed won't move ahead of other central banks. It was a fairly uniform move across the board of around 20 pips.
We'd all be forgiven for expecting a bigger move but dollar bulls pointed to the improvement in the household survey (unemployment rate). There are also questions about global growth around delta that extend well beyond the USA.
Have a great weekend.
