Fed comments eyed ahead of jobs report

Stock markets are treading water once more as we near the end of the week and the highly anticipated US jobs report.

The data we had from the US yesterday suggests markets need to rein in expectations for Friday’s NFP reading, with the ADP report missing by almost half and the ISM manufacturing employment sub-index slipping back into contraction territory. Of course, the ADP is hardly a reliable precursor but that was a huge miss so it’s hard to ignore.

Thankfully, as this may force a more cautious and patient approach from the Fed when it comes to tapering and interest rate hikes, it’s seemingly been welcomed by the markets. That will make tomorrow’s jobs report all the more interesting as a reading at, or above, expectations of 750,000 may be a nasty shock, despite being a healthy sign for the economy.

As for today, jobless claims, factory orders, unit labor costs and nonfarm productivity data will keep us busy. More important may be the commentary coming from Raphael Bostic and Mary Daly, both of whom are due to speak today. Bostic sits on the more hawkish end of the spectrum and has recently stated that a taper in October would be reasonable if job gains continue on the same path, with asset purchases ending around the end of Q1 next year.

It’s Daly’s comments that may be of more interest, as she sits alongside the centrists on the committee and also has a vote this year. She has previously been relaxed on tapering either late this year or early next, depending on whether they see further progress on the labor market and vaccination rates. Should she move in either direction, the markets could respond.

Bitcoin keeps us on our toes

Bitcoin is back above USD 50,000 once more and pushing for a break above USD 51,000 and back into territory not seen since mid-May. Just as it appeared to be lining up for a correction, bitcoin did what it does best, the complete opposite. It certainly keeps us on our toes.

It has yet to break above USD 51,000 though so it may still be a little soon to get excited. But it’s certainly looking a lot more promising than it did a couple of days ago. As yet, there’s still not a huge amount of momentum behind it but that can change, especially if it does break USD 51,000 and take off. It could be a very interesting weekend.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.