This being the first week of the month, it gives rise to a series of
potentially market moving announcements. Chief among these is expected to be
the US Non-Farm Payrolls report on Friday, although the ADP payrolls report (Wednesday)
will, perhaps, provide some indications as to what the official government
statistics will hold.
This month, any effects of the US government shutdown as a result
of the debt-ceiling and associated political problems will have been flushed
from the figures. It is known that employment, or the lack of it, in the US is the
strongest consideration when it comes to Federal Reserve decisions on the
tapering of Quantitative Easing (QE) which is, itself, the main mover of US
dollar rates against all currencies.
Other monetary authorities around the globe will be watching US
employment statistics just as closely as the people to whom they would be
expected to have the largest impact, our American friends.
On Thursday we will have the regular monthly ECB announcement and press
conference. Last month Mario Draghi surprised everyone with a decision to
reduce the benchmark interest rate by a quarter of one percent. Later, a
seemingly unfounded rumour about the overnight interest rate also depressed the
Euro. However, in each case it demonstrated its inherent resilience by bouncing
back, to the extent that it is now significantly higher than it was after last
month’s surprise reduction.
In Australia
the Reserve Bank will make what it calls its “cash rate and RBA statement”.
There are no expectations for a further cut in interest rates, although the
authorities are on record as saying the relative strength of the Aussie dollar
is a concern.
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