A look at the day ahead in European and global markets from Tom Westbrook
The seasons are turning but markets not so much. Asia has met a limp lead from Wall Street with little confidence, as things slip into a holding pattern ahead of today’s U.S. jobs data and then a long weekend in the United States.
Bonds have taken a beating since Jerome Powell’s Jackson Hole talk made clear that the Fed is going to hike and hold rates high, and after red-hot inflation readings in Europe.
Few seem game to sell a dollar that is sweeping all before it – pushing the euro below parity, the yen to the weaker side of 140 and sending the yuan toward the psychological 7-barrier.
Later today, G7 finance ministers meet to try and negotiate a price cap on Russian oil – an attempt at hurting Russian earnings and helping with energy costs.
But market eyes are firmly on the U.S. non-farm payrolls data for August, with a strong report likely to intensify the view that rates are headed higher for longer.
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Economists expect the pace of job growth to slow to 300,000 and the unemployment rate to hold steady at a historically low 3.5%. Anything in that ballpark could firm up expectations of a third consecutive 75-basis-point rate hike later this month.
Once that is out of the way, focus can move to next week’s European Central Bank meeting where pricing currently puts about an 80% probability of a 75 bp hike.
Key developments that could influence markets on Friday:
German trade data, euro zone PPI, U.S. non-farm payrolls
(Reporting by Tom Westbrook; Editing by Ana Nicolaci da Costa)