Economies

XAU/USD draws to the end of a bad week and breaks below key technical support, as expectations of another big rate hike by the US central bank work in the greenback’s favor

The US 02-yr Treasury note jumped today, trading at levels last seen in November 2007. It's trading near 3.85%, reflecting market expectations of at least a 75bps hike next week. Some participants have discussed a 100bps increase, reflecting as a 26% probability presently.

Core CPI accelerated in August as yesterday’s report showed, just a week ahead of the Fed’s upcoming policy meeting, which may put pressure for an even larger move on interest rates

The German index covers earlier losses but cannot benefit from better than expected GDP figures from Eurozone, as markets brace for Thursday’s interest rate decision by the European Central Bank

The US economy created 315K jobs in August. This number was better than the forecast of 295K but less than last month's print of 526K. The unemployment rate increased from 3.5% to 3.7%. Moreover, the participation rate increased by 30 bps to 62.4%. Average hourly earnings rose slower: 03% vs last month's 0.5%. Thus there is evidence of some moderation in the labour market. This is ever so slight, but…

Fed chair delivers on hawkish expectation at Jackson Hole.

UK inflation prints at levels not seen since the 1980s

Whilst headline CPI shows signs of moderating, there may still be sticky elements that need watching.

The pair is in consolidation mode after Wednesday’s US inflation-fueled surge, little changed by the UK GDP release today

The pair jumped yesterday after US headline CPI eased, which led to dovish market repricing around the Fed’s next rate move, but some officials pushed back

The headline Consumer Price Index moderated to +8.5% y/y in July, from 9.1% in the prior month, while the core index proved more sticky, staying at +5.9% y/y