Traders will likely prefer a cautious tone ahead of Wednesday’s US inflation data and the FOMC meeting minutes
US stocks finished lower in volatile trading on Friday after a labor market report came in much lower than expected. Nonfarm payrolls rose by just 194,000 in the month, compared with an estimate of 500,000. Meanwhile, the unemployment rate fell to 4.8%, versus expectations of 5.1%. Investor reaction showed that the report failed to alter expectations for a reduction of the Fed’s bond purchases as soon as November. As such, the Dow Jones Industrial Average fell 0.03%, the S&P 500 shed 0.19%, and the tech-heavy Nasdaq gave up 0.51%.
Asian stocks were mixed on Monday, with investors staying cautious these days. In Japan, the Nikkei 225 rallied 1.60% and the Hang Seng in Hong Kong gained nearly 2%. On the negative side, Australia’s S&P/ASX 200 and China’s Shanghai Composite shed 0.28% and 0.01%, respectively. South Korean markets were closed for a national holiday.
European markets opened lower before turning mixed in recent trading, with the pan-European STOXX 600 index slipping 0.25% in early trading. The upcoming earnings season coupled with inflation-related concerns makes investors cautious at the beginning of a new trading week. FTSE 100 erased early losses to turn slightly positive shrugging off hawkish hints from the Bank of England over the weekend.
In currencies, the dollar trades in a mixed manner ahead of a busy week. the USD weakness following the disappointing jobs report turned out to be short-lived, with surging US Treasury yields help the currency stay afloat on Monday. At the same time, traders will likely prefer a cautious tone ahead of Wednesday’s US inflation data and the FOMC meeting minutes.
EURUSD failed to overcome the 1.1585 intermediate resistance earlier in the day to turn negative during the European hours. The pair slipped back towards the 1.1550 area, struggling to see a more sustained recovery.