Stock markets in Europe opened positively on Friday after an otherwise rotten week, while Asia was fairly mixed ahead of the US jobs report.
It will be interesting to see whether Europe can maintain the rebound today, considering we’re heading into the weekend uncertain whether gas will start flowing through Nord Stream 1 again tomorrow. Grid data suggests it will, but it remains a risk until the gas starts flowing. That weekend risk may make investors a little nervous as we progress through the session and could lead to more caution as we approach the close.
The US jobs report could also be a negative catalyst later in the session if it’s deemed strong enough to warrant more aggressive tightening from the Fed. We’ve recently seen a lot more risk aversion in the markets as Fed commentary has finally gotten through to investors.
We’re still seeing remarkable resilience in the US data, particularly the labor market, even if some cracks appear elsewhere. While the NFP and unemployment rate will naturally attract the most attention initially, it’s the wages that could tip the balance at the central bank, with policymakers concerned about inflation becoming entrenched.
The Yen Hits A 24-Year Low, Will BOJ Intervene?
The Japanese yen has been back in focus recently, falling to a 24-year low against the dollar on Thursday, breaking above 140 in the process. This level has been speculated a lot about in recent months as being the point at which Japanese officials may be tempted to intervene in the markets, and comments overnight could further fuel that, with one spokesperson warning moves are being watched with a high sense of urgency.
That doesn’t appear to have happened yet, and we’re not likely to see any shift from the Bank of Japan either if the recent commentary is anything to go by. While inflation is currently above its target, that’s not expected to last, and there’s seemingly little appetite to change course. That could mean further declines in the yen until intervention is deemed necessary, although the threat of such action could slow the decline, as we’ve already seen.
Treading Water Ahead Of Jobs Report
Bitcoin has been treading water around $20,000 over the past week, perhaps with one eye on today’s jobs report. This is a major level of support, and a significant break could see further losses, with $17,500, the next major test being the level it bottomed at in June.
Risk appetite in the markets has not been positive recently, which has weighed heavily on bitcoin and other risk assets. The jobs report today could compound that if it feeds inflation fears and raises the odds of another 75 basis point Fed hike this month.