The storm clouds are brewing again and that is keeping markets on edge as we look towards European trading. There isn't anything on the economic calendar in the session ahead. So, the attention will turn towards more labour market data from the US in the form of the weekly initial jobless claims.
The report will take on more emphasis as it falls under the same umbrella as the jobs report last Friday. The worry is that labour market conditions are starting to show stronger signs of worsening in the US. And markets are taking that as a signal the Fed is once again late in trying to tweak monetary policy settings.
Given the backdrop, we are likely to observe a more pensive mood in the European morning. I would expect risk trades to stay more guarded. But we might even see some safety flows creep in after the selling yesterday in Wall Street.
It's going to be sort of like catching your last few breaths in quick succession before the storm potentially hits.