FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%

Upside down world: strong macro data is bad news now


4 June 2021

On Thursday, the dollar strengthened, and equities mostly declined after some solid macro data. Thus, we remain in a phase of inverted markets, where good news causes fears that the central bank and the government will accelerate the unwinding of stimulus measures. We saw a similar reaction about a month ago when unexpectedly weak job growth supported stocks and weakened the dollar. At that time, the markets thought that the economic recovery had slowed sharply, which would prevent the Fed from even beginning to discuss a withdrawal of stimulus in the coming weeks. This time, early labour market indicators suggest a likely substantial gain in employment.

Initial jobless claims fell to 385k last week, markedly below the expected 400k. And before that, the ADP reported that they estimated that the private sector added 978k jobs in May after 654 a month earlier. However, the markets did not anticipate an acceleration in hiring on average.

Later the ISM reported a record PMI for non-manufacturing industries at 64. But, again, business activity, orders and price developments provided the biggest drag on the index. In contrast, the employment component shows a cooling of growth. The question becomes relevant, will the markets withstand further positivity, coming mainly from the price area? Equity prices, not to mention the costs of food commodities and metals, are highly heated by logistical problems.

The Food and Agriculture Organization (FAO) price index is rising at its fastest rate since 2011, adding 36.1% over the same month a year earlier and in real terms at its highest level since the late 1970s. That said, data from stock exchanges indicate that much of the growth in the most popular sectors is due to speculative rather than actual demand.

Another issue is that the real economy and labour market are quite far from the global peak, just as some commodities and stock markets. Still, central bankers can only cool things down once.

This means that stock market bulls should be wary of solid labour market data later today. Strong employment growth will unleash the Fed’s inflationary spiral, which will be a blow to equities and risk crashing commodity markets as well as putting the dollar back on the upside. Alternatively, weak indicators will create hopes of extending the status quo in Fed policy, which will be suitable for markets and return moderate pressure on the dollar.

#source

Related

US Markets lost major support, Asian Indices are melting
US Markets lost major support, Asian Indices are melting

Global markets closed last week on the back foot, and no significant positive factors emerged in Asian trading, increasing the flight to safety. The Hang Seng lost...

20 Sep 2021

US Retail sales and other data has supported Dollar
US Retail sales and other data has supported Dollar

The US Retail sales notably exceeded expectations, adding 0.7% in August vs an expected 0.7% decline. The increase to August last year is an impressive 14.9%...

17 Sep 2021

Geopolitics Fire Up Up and Cryptos Are Booming
Geopolitics Fire Up Up and Cryptos Are Booming

Futures in the United States and Europe are trading lower today as investors are worried about the new security agreement between the U.S., the U.K. and Australia...

16 Sep 2021

UK inflation surges, stocks struggle
UK inflation surges, stocks struggle

European markets flat at the open this morning as UK inflation surged to a record high in August and Chinese economic data was soft. China’s retail sales fell to...

15 Sep 2021

Gold is anxiously waiting for the US inflation data
Gold is anxiously waiting for the US inflation data

Gold, hovering around $1790 since last Thursday, might take an even harder hit. The bears are waiting for a good signal to launch an attack. It is now holding it below significant levels...

14 Sep 2021

Here Is Why Stock Futures Are Trading Lower
Here Is Why Stock Futures Are Trading Lower

Despite a week of doom and gloom in the stock markets, futures in the United States are still trading lower. Since February, the S&P 500 has been on its longest...

13 Sep 2021


Editors' Picks

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
Vantage FX information and reviews
Vantage FX
78%
Moneta Markets information and reviews
Moneta Markets
77%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.