China back to the business!
Market analyst – IFC Markets
Earlier today Asian stocks closed higher as China finally ended its long holiday and back to the business and the report of the agreement of US parties to increase the debt limit brought some hopes to Wall Street. And now, eyes turn to key US jobs data for any fresh insight into the timing of Federal Reserve tapering.
In Europe, Footsie is up by 0.1%, but DAX and CAC 40 are down by 0.2% and 0.4% respectively, as weak German trade data weighing on markets. At the same time, the US futures are trading so cautiously as we are getting closer to the NFP numbers.
The German exports fell in August for the first time in 15 months. A 1.2% drop compared with the 0.5% increase expected in the largest economy of Europe shows the effect of the global supply chain shortage. These weak data from Germany, in line with ECB dovish policies that officials already told, will not be changed by year-end puts the Euro in the weaker position against its crosses.
On the energy market, WTI prices raised again to print the seventh bullish week as doubts over whether the US Energy Department was considering releasing oil from the country’s strategic reserves or not, increasing.
Despite all mentioned news and data, the market risk decreased and VIX eased under 22, all way down towards 21.20. With reducing market risk, bond demand also eased, and US 10 Year Bond yields increased above 1.59% earlier because investors have more interest in the stock and other higher-risk markets than investing in Bonds.
While earlier this week, Mrs. Loretta Mester from FED reminded that rising inflation is mainly driven by the short-term nature of the pandemic and will return to normal levels in the future, so the Fed will not react too early to avoid bad consequences, USD also reaction mixed and confused ahead of NFP numbers. Overall uptrend is confirmed and mostly seems it is waiting to see the amount of reducing in debt purchasing amount to determine the rate of reaction.
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