Markets subdued; Dollar strong ahead of non-farm payrolls later today. In the absence of much else going on in the latter half of this week, traders and non-traders alike will have their eye on the developing situation in the middle east, which appears to have taken a turn for the worst. The Israeli retaliation against Lebanon and surrounding areas saw central Beirut hit by heavy missile strikes last night. The tensions that had been bubbling away for the past few weeks have now reached the surface and the question on everyone’s mind is how far both sides are willing to go.
The reaction in oil markets was predictable. Brent Crude gained 4% on Thursday, emerging from the pit that had engulfed oil prices for the past month and reclaiming $77 a barrel. Gold showed no interest in acting like a safe haven’t asset this week, remaining remarkably flat over the past couple of sessions and barely moving from $2,650 an ounce. If anything, the greenback seemed the most willing to take up the mantle, enjoying consistent inflows this week. The DXY is up 1.5% so far this week, in no small part thanks to Jerome Powell’s dovish comments on Monday.
The week is not over yet however, the main event of the economic calendar is a mere few hours away. 140 thousand new jobs is the magic number for the September non-farm payrolls, with an employment rate of 4.2%. Yesterday’s initial jobless claims came in marginally higher than expected but nothing earth shattering. Nevertheless, NFPs can always surprise; any major deviation from predictions will have a significant market impact.
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