The market
sentiment tremendously improved by the end of the week. The S&P 500 broad
market index after plummeting to the bottom at 4270-4280 points managed to jump
back almost to 4335 points.
The
unthinkable threat of the default of the United States was waved away from the
market as Democrats and Republicans came to a temporary agreement to lift the
debt ceiling by $480 billion that would allow the U.S. Treasury to cover its
debt by early December. This news was a primary trigger for the stock market to
recover since the mid of this week.
Investors are
now looking at the Federal Reserve’s (Fed) monetary policy that is now
primarily defined by the U.S. labour market. The Fed Chairman Jerome Powell has
clearly stated that the monetary policymaker would start the tapering of its
massive monthly $120 billion bond-buying program in November if the Non-Farm
Payrolls report before then is in line with or better than forecasts . And this
is a crucial note that may ease the reaction of investors in case of moderately
positive data that is in line or even slightly below forecasted figures and
amplify the reaction in case of strong indications.
Consensus
figures suggest that Non-Farm Payrolls will rise by 500,000 in September, the
decline of unemployment to 5.1% from 5.2%, and rising hourly earnings by 4.6% year-on-year
from 4.3% in August.
The Fed may
consider such a report as a decent one that meets criteria to start discussions
over tapering in November. In case the data is close to the forecast, we may
expect stock markets to resume a decline. And the crucial level for such a
trend would be formed if S&P 500 index stays below 4435 points by the end
of Friday, opening the way to a possible decline to 4000-4100 in the next week.
If the index climbs to 4475 points, the upside scenario would become a primary
one.
Crude
market is suffering high volatility with a rapid change of technical patterns.
Appealingly, Brent crude prices would remain in the area of $79.0-84.0 per
barrel if new factors would not appear to break this area.
Gold prices
seem to be in equilibrium around $1750 per troy ounce with the Mid-term target
at $1700 per ounce. However, depending on incoming labour data on Friday, gold
prices may test the $1770-1800 area in case of a weak report.
The FX
market has a more complex picture as the EURUSD is close to the lowest weekly
support level at 1.14800-1.15000, where the pair may reverse to the 1.15700.
But if the pair remains below this level it may be further pressured towards the
1.14800-1.15000 area.
The GBDUSD
is much more univocal as it is “charged” for the rise towards 1.37000-1.38000.