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Markets await Friday’s jobs report to measure Fed hawkishness


US stocks edged higher on Thursday, as investors await Friday’s jobs report to gauge how hawkish the Federal Reserve will be. Recent data pointed to a resilient US economy, buoying sentiment later in the day. Several Fed officials in recent days reiterated their promise to remain aggressive to control inflation, quashing any hopes of dovish pivot investors had come to expect after July’s inflation reading. A fresh batch of labour-market and manufacturing data this week also pointed to a resilient US economy, strengthening the central bank’s resolve. Besides that, China put the megacity of Chengdu under lockdown, delivering a blow to economic growth.  Moreover, traders are also assessing political risks as Russia’s invasion of Ukraine continues and tensions in Taiwan mount, with the latter shooting down a civilian after weeks of complaints about incursions by unmanned aerial vehicles from China.

The benchmarks, both S&P500 and Dow Jones Industrial Average rallied for the day, as S&P500 ended its losing streak after falling for most of the session. Seven out of eleven sectors stayed in positive territory, as Health Care performed the best among all groups, rising 1.65% on Thursday. The Nasdaq 100 finished the day flat, and the Dow Jones Industrial Average gained 0.5%, while the MSCI world index slid with a 0.6% loss on Thursday.

Main Pairs Movement

The US dollar surged on Thursday, after U.S. data showed a resilient economy, giving the Federal Reserve more room to aggressively hike rates to quell inflation. The U.S. currency firmed after a government report indicated that the number of Americans filing new claims for unemployment benefits declined further last week, which is consistent with strong demand for workers and tight labour market conditions. The DXY index continues its uptrend tendency and surged to a 20-year-high level of 109.9 during the US trading session.

The GBP/USD dropped with a 0.66% loss on daily basis for the day, as the cable notched its fifth consecutive day loss with a strong greenback across the board. The pound keeps weighting and tumbled to touch its lowest level since the pandemic below 1.150 during the early US trading session, following the US data announcement. Meantime, EUR/USD witnessed heavy selling transactions ahead of the US trading session and touched a daily low level below 0.992 after the U.S. readings. The pair dropped 1.07% on Thursday.

Gold plunged with a 0.79% loss for the day, as the yellow metal wandered around the six-week low $1,695 mark with downbeat consensus for US NFP teasing corrective bounce as DXY hovers around a 20-year high. The XAU/USD remained with bearish momentum and touched a daily low level below the $1,690 mark.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDNonfarm Payrolls (Aug)20:30300K
USDUnemployment Rate (Aug)20:303.5%