Weaker-than-expected U.S. Non-Farm Payroll data intensifies Fed’s dovish pivot bets. U.S. stocks see profit-taking while Asian markets rally. Gold and WTI crude oil gain.
Nikkei 225 soared over Japan’s PM resignation, JPY spiked but remained below resistance
A weaker-than-expected US non-farm payroll data for August (actual: 22,000 versus consensus: 75,000), and a higher employment rate at 4.3%, the highest level since October 2021 from 4.2% in July, sent the US Dollar Index tumbling back below its 20-day and 50-day moving averages as it shed by -0.5% last Friday, 6 September.
According to the latest CME Fedwatch data, market expectations for Fed rate cuts have intensified. Fed Funds futures now assign a 10% probability (vs. 0% pre-NFP) of a larger 50-basis-point cut at the upcoming 17 September FOMC meeting.
In addition, traders are pricing in a more dovish path of three rate cuts by year-end, which would lower the Fed Funds rate to 3.50%–3.75% from the current 4.25%–4.50%, compared with two cuts anticipated earlier.
The US stock market fell victim to the old age adage of “buy the rumour, sell the news” as the major US stock indices rallied a day before the release of the NFP data and profit-taking activities that sent the S&P 500 declining by -0.9% intraday after an initial pop-up to a fresh intraday all-time high of 6,533. Thereafter, the selling subsided at the 20-day moving average, and losses were trimmed as the S&P 500 ended last Friday’s session with a minor loss of -0.3%.
In today’s Asia session, the S&P 500 and Nasdaq 100 E-mini futures started a new week with an upbeat tone. At the time of writing, they recorded an intraday gain of 0.2% and 0.3%, respectively.
Most Asia Pacific stock markets continued to bask in the bullish limelight, reinforced by the potential imminent Fed’s dovish pivot. Hong Kong’s Hang Seng Index rallied by 0.9% while Singapore’s Straits Times Index traded almost unchanged.
One of the top intraday performers is Japan’s Nikkei 225, where it shot up by 1.45%, just a whisker below its current all-time intraday high of 43,876 printed recently on 19 August. The resignation of Japan’s PM Ishiba on Sunday will likely pave the way for contenders with a more liberal stance towards fiscal policy and support more fiscal stimulus measures.
The US dollar has continued to remain muted in today’s Asia session, shedding -0.4% and -0.3% against the NZD and AUD. The outlier has been the Japanese yen, where the US dollar remained against the JPY over uncertainties on the Bank of Japan’s current monetary policy tightening path as one of the leading Japanese PM contenders, Sanae Takaichi, tends to favour monetary easing and looser fiscal spending, at odds with BoJ’s current normalisation monetary policy stance.
The USD/JPY gapped up by 0.7% but the intraday rally stalled below the 200-day moving average, acting as a key intermediate resistance at around 148.75, where its current gains have been trimmed to 0.3% at the time of writing.
Gold (XAU/USD) has continued to trade in a bullish tone with an intraday gain of 0.3%. It is retesting its current all-time high of US$3,600 printed last Friday.
WTI crude oil jumped by 1.6% in today’s Asia session, erasing three-quarters of last Friday’s loss of -2.2% reinforced by OPEC+’s modest production hike of 137,000 barrels per day (bpd) from October announced on Sunday, significantly smaller than the previous monthly hikes of about 555,000 bpd in August and September, and 411,000 bpd in June and July.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
