The US economy created 194K jobs in September, well below the 490K-500K expected. Furthermore, employment estimates from ADP and weekly jobless claims set up even stronger data, highlighting the contrast between expectation and fact.
However, the FxPro analyst team has mentioned in the emailed comment that not all numbers are weak. The monthly data has been revised up, and the unemployment rate has fallen from 5.2% to 4.8%. The fall in the unemployment rate remains the fastest in the more than 70-year history of this indicator, although job growth missed optimistic short-term hopes.
The rate of wage growth also remains elevated. Average hourly earnings rose 0.6% month-on-month and 4.6% year-on-year, developing an acceleration. The data suggests that Americans are in no hurry to work even though the unemployment benefit programmes have expired and companies are posting a record number of job openings.
The initial reaction to the monthly jobs report has been pressure on the dollar and strength in equities and precious metals markets. However, the robustness of this reaction should be tested in the coming hours as a more detailed analysis raises doubts that this slowdown will be enough to stop the Fed from starting to roll back QE from November.
The Chinese bourses, which opened after a week-long holiday, are enjoying an influx of buyers on reduced fears of a domino effect from the Evergrande default.
The FxPro analyst team has added that Chinese business activity data were also bullish, marking a return to expansion in services and manufacturing last month after a dip in August. Chinese indexes are gaining about 1% today despite the liquidity squeeze from the PBC - a sign that the market is already seeing an indiscriminate sell-off in Chinese assets as it has been witnessing in previous weeks.
The cautious sentiment in US equity markets, where selling prevailed towards the end of the day, could reflect that the funds prefer the sell-the-growth tactic. The pressure on the S&P500 intensified on the return of the index to its 50-day average. But interestingly, earlier, the European indices (DAX40, FTSE100, and several others) and the Dow Jones found strong buying when they touched the 200-day average. The tug-of-war between bulls and bears is concentrated between these technical levels. Going beyond them could trigger the surrender of one of the sides, causing the start of a powerful trend.