For future perspective, we need the analyze the past
In the past week, we had some very important data which ended with surprise in the US employment numbers.
Monday, Germany's Inflation was unchanged at 0.0% in August and 3.9% YoY. Also this day we had Pending Home Sales numbers in the US that decreased 1.8% in July.
Tuesday, Consumer Confidence in the United States declined to 113.8 in August from 125.1 in July, but before that, Chinese PMI in August disappointed the markets to ease to 50.1 for Manufacturing and under 50 for the Service sector. On the other hand, Germany's employment decreased to 5.5% with EU inflation above the ECB target at 3.0%. Tuesday we learned that while overall employment is fine in the EU, inflation increased, and it means that we can expect a less dovish tone from ECB in its next meetings.
Wednesday was the darkest day of the past week, with the sharp decline in Caixin Manufacturing PMI at the beginning of the day, and later, German Manufacturing activities and US ADP numbers added to these concerns. Data published by the Automatic Data Processing (ADP) Research Institute showed that private-sector employment rose by 374,000, much less than 613,000 estimates. At the same time, US ISM Manufacturing improved modestly to 59.9 in August from 59.5 in July.
And Thursday, the Market focus was on US initial Jobless Claims and Factory orders, and both have beat the expectations, to help the FED members, Mr. Bostic to have a bit Hawkish comments.
And finally, Friday, the US Bureau of Labor data, surprised the market participants by sharply missing the expectations. Nonfarm Payrolls in August increased by just 235,000almost three times less than the forecast of 750,000. However, unemployment still fell to 5.2%, and Participation Rate remaining steady at 61.7%. And the ISM Services PMI fell to 61.7 in August from the record-high set at 64.1 in July but this data was ignored by market participants as the focus was on Labor market data.
Our general impression from published data is that process of economic rebounding is slowing down, so the expectations from most central banks are to hold their policies and stop the path to strict economic policies, at least for a bit.
This policy means more support from the manufacturing, service sector, and Stock Markets, In the short, term, what we can see is a bit more weakness in the currencies, especially for the US dollar. But for commodity currencies, it must be supportive.
For Gold, as weakness is the estimates for US Dollar, in the short term, Gold can be supported. In the mid-term Government's support can encourage the retail investors once more to join the stock markets, hoping on more raise for more profits, which is not that positive for the Gold market, so in the mid-term, we can see again downturn in the Gold Market.
