Chances of a US rate hike in December went through a roller coaster ride. The non-farm payroll numbers dropped for the third month in a row and unemployment climbed to 5%. The immediate market reaction was a rate hike deferral to sometime next year - consequently US Dollar fell and the major currencies consequently gained. However Vice Chair of the US Federal Reserve said that the unemployment numbers are "just right" and markets reacted immediately. Now markets are expecting a more than 60% chance of a rate hike in December.
Markets are also keenly watching the US Presidential elections with the D day fast approaching on 8 November less than a month away. The focus has clearly shifted to the political arena. The latest revelations on Donald Trump's treatment of women had damaging consequences on his campaign and Mrs Clinton is gaining grounds and holds a sizable lead as per the opinion polls ahead of the second debate scheduled for later today. Markets will be more looking at the election results and clearly the focus has now shifted to politics.
Markets are also keenly watching the US Presidential elections with the D day fast approaching on 8 November less than a month away. The focus has clearly shifted to the political arena. The latest revelations on Donald Trump's treatment of women had damaging consequences on his campaign and Mrs Clinton is gaining grounds and holds a sizable lead as per the opinion polls ahead of the second debate scheduled for later today. Markets will be more looking at the election results and clearly the focus has now shifted to politics.
ASIAN SELL OFF PLUNGED POUND STERLING
Fears of a tough stance from Europe following a firmer date of March 2017 for a Brexit trigger by PM Teresa May plunged the Pound Sterling to US Dollar 1.18 recovering at the end of the day to 1.24. Since Brexit voting, the pound sterling has lost 16% of its value since the Brexit vote. The plunge might have been exacerbated by triggers that were put in place by traders - however the tough stance from European leaders following the UK PM's announcement means that it will be a rocky period for the currency. With manufacturing data looking up and a weaker currency will mean exports are likely to grow which is expected to have a positive impact on the UK economy.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Industrial Average Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore | As at 7-Oct 1.50 1.73 2.18 1.72 0.7573 0.6811 78.61 5.0526 5,467 2,153 18,240 3,004 51.93 1,258 55.86 | As at 30-Sep 1.50 1.74 1.90 1.59 0.7630 0.6802 77.13 5.0893 5,435 2,168 18,308 3,004 50.19 1,316 56.68 |
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