November 02, 2024 (MLN): Surprisingly, the US non-farm payroll report indicated only 12,000 new jobs were added after September's revised figures of 254.000.
The market predicted that about 100,000 new jobs will be created. Unemployment matched the expectations and remained unchanged at 4.1%.
Given that the hurricanes in the Southern states and the manufacturing strikes may have caused the numbers to miss the correct count, I have a strong belief that next month they will be considerably revised upward.
The Fed is unlikely to cut rates by more than 25 basis points given the newly revealed economic data, which suggests that inflation hasn't fallen below. The consumer prices have an average of 2.7% over the last three months.
Aside from the turmoil in the Middle East, there are a number of significant events in the upcoming week, such as the US elections, which start on Tuesday, and the FOMC's interest rate decision.
Because there is so much global uncertainty, I believe that the market will be more focused on the outcome of the US election this week.
The markets are uneasy because the two contenders have differing economic priorities. Recently there have been indications of stress in US bond yields and the stock market. Investors are likely drawn to the USD since it is a safe haven currency.
Indeed, investors will monitor US economic statistics as well. The ISM Services PMI is due on Tuesday, Jobless claims are due on Thursday, and the University of Michigan consumer sentiment will be released by the statistics department on Friday morning.
All eyes are on gold, which has the potential to be a true beneficiary.
After a disappointing Friday closing, I initially anticipate further decline in the gold price.
However, if Harris prevails, the market will take time to adjust, thus gold is expected to make a strong recovery later after the election announcement. According to the election manifesto, her party will focus on helping the people in her economic plan.
But if Trump wins, everyone knows that he enjoys crypto and crypto related products could benefit.
He has also stated that he would want to see interest rates in the US lowered. However, there is a strong belief that Trump's policies may impose significant tariffs on Chinese goods, which could raise inflation.
After the US election, I do see one significant risk, though. If gold doesn't keep rising, it won't be able to reach the levels of $ 2825. On a downside break of $ 2692, it can still fall steeply to test the $ 2670-80 zones before starting to rise again to test new highs.
Therefore, the financial market will continue to be unpredictable this week, as they will search for a more definite direction.
# GOLD @ $ 2736- Heading for a volatile week. Risk is that initially gold will exhaust earlier. It is expected to hold below $ 2763-68. Break of $ 2720-22 will encourage for a test of $ 2702-04 or $ 2690.
However, since the upside risk is still present, any significant decline will be regarded as a correction.
#EURO @ 1.0831- Euro has strong support around 1.0740. It is likely to hold, but it needs to surpass 1.0920 levels for a test of 1.0960.
#GBP @ 1.2913- Probably Cable won't surrender 1.2810-20 levels. A move beyond 1.3010 could push it towards 1.3050-80 zones. Or else 1.2770.
#JPY @ 152.92- USD will struggle to move above 153.50-80. A break of 151.40 levels could see a fall towards 150.50. Or else 154.20
The writer is the former Country Treasurer of Chase Manhattan Bank
Disclaimer: The views and analysis in this article are the opinions of the author and are for informational purposes only. It is not intended to be financial or investment advice and should not be the basis for making financial decisions.
Posted on: 2024-11-02T17:43:20+05:00
