Markets Look For Direction, While Nord Stream II And SMIC Are In The Cross-Hairs

America

Last week's employment data was sufficiently strong to diminish further the likelihood that another stimulus bill will be agreed upon between the White House and the House of Representatives. The 1.4 mln jobs created were flatted by 250k temporary census workers. Around 1 mln private-sector workers returned to their jobs, and retail and restaurant employment picked up. Still, to keep these large numbers in perspective, consider that the US has about 11.5 mln fewer jobs in August than it did in February. The number of job losses that are permanent rose to 3.4 mln in August from 2.9 mln in July. The larger than expected drop in the unemployment rate to 8.4% from 10.2% may have been bolstered by the return of self-employed and gig workers whose extended benefits expired in July.  

The US data highlight of the week may be the August CPI on Friday. The headline is expected to tick up to 1.2% from 1.0%, while the core rate is forecast to be unchanged at 1.6%. Canada reported strong August jobs growth. The nearly 246k jobs created was near estimates, but unlike in July, the lion's share of the jobs were full-time positions (almost 206k). The highlight of the week is the Bank of Canada meeting on Wednesday. We don't expect fresh initiatives, though it will likely reassure investors and businesses that it is prepared to act if necessary. The ball is really in the government's hand, and the opening of the parliament session later this month is seen as the next key event. Mexico reports August CPI and industrial output figures this week. Both are expected to tick-up. Mexico's central bank meets on September 24, and the scope for near-term easing is limited. Banxico is likely to stand pat.  

The US dollar briefly dripped below CAD1.3000 early last week but has since found support in the CAD1.3030-CAD1.3040 area. Initial resistance has been encountered in the CAD1.3140-CAD1.3160 area. The 20-day moving average, which the greenback has not traded above since the third week in July, is near CAD1.3160. A break above there could spur a move toward CAD1.3240. The US dollar fell against the Mexican peso for the fourth consecutive week and frayed its 200-day moving average (~MXN21.5280) for the first time since early this year. Amid a bout of profit-taking, initial resistance is seen near MXN21.80 and then MXN22.00.  

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Read more by Marc on his site Marc to Market.

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