We can work it out

Market Update: 7 August 2020

As markets get excited by US initial jobless claims and Trump’s positive tweets about jobs (not his campaigns’ as they’ve been banned), tonight’s Non-Farm Payrolls are highly anticipated alongside a Fiscal deal.

So given the market has priced in perfection, there’s a risk to the downside (buy the rumor, sell the fact). AUD has rallied 2.4% from the week’s lows and failed a 2nd attempt above 0.7240, S&P +4% from a week ago and Nasdaq +5% …. not to mention the market darling – Gold +6%.

This is not to say we’re necessarily in for big corrections… the trend is still your friend. So as long as the stimulus is still coming, the trade deals with China don’t reverse (Canada now at risk of US tariffs), vaccines haven’t failed next rounds etc… then consolidations are short lived.

BoE’s meeting last night affirmed their policy and perhaps weren’t as dovish as anticipated, so GBP continues to tick higher alongside EUR. It’s partially a negative USD story, so macro moves like these can only be expressed in relative value trades.

So from a gain in June of 4.8m and an anticipated +1.48M change in payrolls, despite 2nd waves across the country, we may certainly be in for an interesting night.

Have a great weekend!

Sources: Bloomberg

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