Article / 05 September 2016 at 7:00 GMT

Morning Markets: Is September still live?

Former managing editor, / Saxo Bank



  • Europe August Service Purchasing Manager Index       (0500-0830 GMT)
  • Eurozone: Sentix September Investor Confidence         (0830 GMT)
  • Euro area July retail sales                                              (0900 GMT)

The knee-jerk reaction Friday after a disappointing nonfarm payrolls for August was to rule out the September 21 Federal Open Market Committee meeting as a likely date for the next rate move but can we be so sure?

Markets certainly seem to edging towards a hike later in the year with the September chance receding to 21% in the aftermath of the NFP with the needle on December hardly moved at 59%. 

The dollar was also on the backfoot across the board with USDJPY some 100 pips down on Friday's high of 104.32 and a speech Monday by Bank of Japan governor Haruhiko Kuroda did little to stem that as he failed to clarify what the BoJ might do at its pivotal meeting later this month to address yen strengthening. South Korea's won was the biggest winner surging more than 1% to continue a move that began the day before the NFP. A holiday in the US today may offer dollar some breathing space.

But Goldman Sachs is just one notable dissenter from the rate-move consensus and has raised the chance for a move this month to 55% citing Fed chair Janet Yellen's comments at Jackson Hole that the bar for a move had been set lower. It's a persuasive stance given that this was a bit of a departure from the cautious language that Yellen typically employs and with the average NFP over the last three months approximating to 200,000, there could be a sting in the tail.

Elsewhere, UK prime minister Theresa May argued against an Australia-style points based system for immigration at the G20 in Hangzhou, China which may have been designed to appease her peers by the dreamy West lake but will probably have enraged the Brexit camp back home.

She will also be leaving China nevertheless with the distinct impression that Britain cannot necessarily jump the queue on trade deals after a warning from president Barack Obama to that effect and there will no doubt be some home truths from Beijing over the current standoff over the Hinckley Point C Nuclear project.

Another leader likely to beat a hasty retreat is a chastened Angela Merkel after anti-immigrant party Alternative for Germany took 21% in an important regional election relegating her CDU party to third. The anti-establishment, dystopian agenda that had its crowning point so far in Brexit is a long way from finished yet.

Market signals

Asian session

  • Financial markets in the Canada, India and the US are shut on Monday for holidays.
  • NZ commodity prices rose 3.2% in August; they were up 2.1% in July
  • Australia's MI inflation gauge rose to 0.2% in August, up from minus 0.3% in July
  • Asian stocks rallied the most in eight weeks
  • Australia's AIG services index fell 9.5 points in August to 45
  • Japan's August average cash earnings rose 1.4% year-on-year; 0.5% was expected
  • Gold for immediate delivery declined 0.1%, after rallying 0.9% on Friday
  • WTI Crude fell as much as 0.9% in early trade
  • China’s services output picked up in August
  • The MSCI Asia Pacific Index added 1.3% in mid-session trading
  • Japan's Nikkei was up 0.86 % at 0516 GMT
  • The Hang Seng firmed strongly up 1.76% at 0518 GMT
  • The Shanghai Composite Index was slightly positive, moving up 0.21%
  •  Mumbai Sensex also firmed by 0.34% at 0520 GMT
  • The ASX was up 0.9% at 0550 GMT

Forex ahead

  • In early trading South Korea’s won climbed 0.7% against the USD
  • The NZD also gained against US, rising 0.3% in morning trade
  • South Korea’s won advanced to a two-week high
  • NZD appreciated for a fourth day

From the Floor

Beyond the ECB… “The big thing for the euro could be political risks ahead of Italy’s referendum”, says Hardy

Extreme complacency. ”The VIX net-short position reached a record high last week”, says Hansen

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

There's a Service PMI, an investor confidence read and July retail sales all in store for Europe today, and the market will be willing on some good news, says Juhani Huopainen

Aussie comeback
Both the AUD and the ASX were coming back with some force after a horror week for both – all courtesy of the not very impressive US jobs report, says Saxo Capital Markets in Sydney

Nikkei reacts
Japan's Nikkei 225 gained 1.2% in early Asian trade, its highest level in three months on the poor nonfarm payroll report, writes Saxo's Singapore trading team.

No game changer 
Nonfarm payrolls are not a gamechanger for the Fed, but September remains an option, Kay Van Petersen

Rates on hold
The August nonfarm payrolls disappointment has curbed the dollar's enthusiasm and probably put an end to speculation on a Federal Reserve move on rates this month, says Clare MacCarthy.


He doesn't look too bothered by the sharp move in USDJPY after
last Friday's nonfarm payrolls disappointment. Photo: iStock

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Martin O'Rourke Martin O'Rourke
A lively opening session on the oil markets with both benchmarks spiking as speculation mounts of some sort of announcement from Opec kingpin Saudi Arabia.


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