Spreadex Market Update
Stocks Tank and USD Rallies Following NFP Upside Surprise
Stocks managed to finish the week higher despite dropping sharply on Friday, while the US Dollar has seen a surge of fresh demand on the back of Friday’s September jobs report, which came in well above forecasts with the headline NFP reading at 263k, above the 248k forecast. Similarly, the unemployment rate was seen falling back to 3.5% from 3.7% prior while earnings were unchanged at 0.3%.
The report was resoundingly bullish for USD and helped extend the gains which had started during the middle of last week following bullish ISM services and ADP employment data. With several Fed members last week seen reaffirming their support for continued tightening, the market is now looking for a larger 75bps hike in November. Focus now turns to the September CPI report this week.
Key Factors for Today
- USD rallies stronger following better-than-expected jobs data
- Equities turn lower amidst USD strength
- Safe-havens leading in FX – risk currencies seen lower
- Metals and oil turn lower as USD rally gathers pace
Coming Up
Very quiet data sheet today with US and Canadian markets offline
- IMF meetings all day
- USD FOMC Brainard speaks
Equities Pressured By Fresh USD Strength
The rebound in the US Dollar has taken a toll on equities prices. Indices across the board were seen turning lower into the end of last week as the US recovery gathered momentum. With the Dollar pushing higher over the European open on Monday, indices are under further pressure and look vulnerable to a fresh leg lower if USD breaks out this week.
Evgen Shares Rally on Deal News
In the UK, shares in Evgen Pharma were seen opening around 40% higher today on the back of news that the company has licensed the global rights for a drug treating neurodevelopmental disorders and schizophrenia to Swiss group Stalicla. Evgen will now
embark on a phased trial testing the drug with the deal reportedly worth around $160 million. Despite the initial move higher, gains are quickly being eroded amidst the broader risk-off tone to markets today.
USD Leads in FX – Risk Currencies Falling
In FX, the resurgent strength in USD has created waves with risk currencies tumbling in line with the moves we’re seeing in equities and commodities. AUD and NZD have been the hardest hit, with AUDUSD seen breaking down to fresh lows on the year. JPY and CHF, meanwhile, have seen better demand due to increased safe-haven flows amidst the downturn in risk assets.
Metals & Oil Curtailed by Stronger USD
In the metals and commodities space, both gold and silver are turning sharply lower on Monday, extending the losses which kicked in last week. Both metals look vulnerable to further losses should USD continue to gain this week, particularly if Wednesday’s CPI report is bullish.
Crude oil prices are starting the week on a softer footing also. Following the breakout move last week, in response to news of huge new OPEC+ supply cuts, crude has come under pressure early on Monday as USD takens centre stage again.
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