Forex: Latest Market News

The NFP US jobs report covering August was down too much below expectation. Most Affected domain was retail and leisure/hospitalitysectors.COVID fear is again keeping people home but also another cause is laborsupply issue because wages are up.·  Payrolls grew just 235,000 in August &unemployment rate fell to 5.2%.·  The leisure/hospitality sector had no net jobincrease and retail employment fell, yet businesses in those segments are stilltrying to hire.  ·  Similarly, construction lost jobs because ofmaterials shortages and increased price in transports ·  Strong wage growth and rising participation are notrelevant since labor demand is lower.·  The labor force participation rate was unchangedat 61.7DollarINDEX is DOWN, Stocks down and, Gold Up

Stocks open subdued across the board as August failed to follow up from July’s solid NFP report – note a recent uptick in the NDX. The below forecast range 250k US jobs added in August has hit risk sentiment, seeing stock futures reverse earlier strength (particularly Russell 2k), with a pause in jobs added in the Hospitality and Leisure sector suggestive of some Delta-induced reopening roadblocks, although one could argue that is “transitory”   Stock Markets are all time high this week ignoring the danger of Tapering this Year.  Monday markets are closed and we expect reactions on Tuesday.

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Japanese PM Suga is to step down as PM, according to Kyodo.

As a reminder, there were comments yesterday from Japanese LDP leadership contender Kishida that they need to swiftly conduct economic measures worth tens of trillions of yen to cope with the virus pain and that they need to implement business continuation support including payouts to households and businesses. Furthermore, he said they will provide cash payouts to non-regular workers, women and households with children that are facing a difficult situation due to the virus. (Newswires)

JPY UP with 15 pips

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Australia's New South Wales reports 1,431 locally transmitted COVID-19 cases and the state Premier says expects next two weeks to be the worst for COVID infections.

New Zealand reports 28 new COVID-19 cases much lower than Australia.

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Australia's Victoria State Premier says it is too soon to open up from the COVID-19 lockdown and would need a low number of cases to ease restrictions, adds reopening plan to be announced tomorrow but it is not freedom day and will only be modest changes.

Australia's capital of Canberra will extend lockdown through September 17th.

The EU voted to approve fresh restrictions on US travellers coming into the bloc. US State Department raised the travel alert for Germany and Canada to level 3, while the US also issued COVID-19 "Do Not Travel" advisories for Switzerland and Estonia.

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USD has gained vs. peers, sending the DXY to session highs of 92.791 without fundamental catalyst, however, it is worth noting that month-end factors could be the reason

Credit Agricole suggests that its corporate flow model is pointing towards EUR/USD selling; and Barclays suggests the UST month-end extension at 0.12yrs

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ECB's Villeroy says that France and the EZ should be back to pre-COVID levels in early 2022 or maybe before this

• No risk of higher inflation at this stage
• PEPP will remain until at least March 2022; not urgent to decide on it at the September gathering
• Financing conditions have improved since June

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Oil producers have shut-in 95.65% of US Gulf of Mexico crude output totalling 1.74mln bpd and 93.75% of natgas production, while the Colonial Pipeline announced it will temporarily shut fuel lines from Houston, Texas to Greensboro, North Carolina and Marathon Petroleum's Garyville, Louisiana refinery (556k bpd) was also shut down over the weekend. US President Biden said Hurricane Ida is life threatening with the devastation likely to be immense and beyond the coasts, while he added they are planning for the worst from the hurricane and that it would take weeks for some places to restore power following the hurricane. Furthermore, President Biden later declared a major disaster for Louisiana and Entergy announced that all of New Orleans had lost power due to catastrophic transmission damage from Hurricane Ida.

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Fed Vice Chair Clarida (voter) stated there has been clear progress on the labour market which is in agreement with Fed Chair Powell and he would support a taper if the labour market gains continue as expected, while he added that we will get a better read on the labour market this fall. (Newswires)

Fed's Waller (voter) said we have definitely made progress on inflation and that one more good jobs report will be sufficient to be able to start tapering. Waller added that he would like to start to taper early this fall and does not see a reason to wait, while he definitely would like to see MBS taped faster and would like to finish taper by mid-2022 to have the space to raise rates if required. (Newswires)

Fed's Mester (2022, 2024 voter) reiterated the Fed has basically met the criteria for tapering asset purchases and believes the Fed should use the September meeting to lay out thinking about the pace and timing of tapering and looks to end taper by mid-2022. Mester also noted that whether they start tapering in November or December, it is not going to make a material difference for the economy and reiterated that even if there is some pullback, she thinks the economy will remain strong. (Newswires)

Fed's Bullard (2022 voter) said he favours tapering treasuries by USD 20bln a month and MBS by USD 10bln a month. (Newswires)

White House forecasts budget deficit to reduce by USD 684bln in the next decade, while there were separate comments from White House Economic Adviser Bernstein that they need to keep pushing a robust recovery in the US. (Newswires)

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