The highly anticipated U.S. nonfarm payrolls finally decline on Friday, marking the beginning of a new month, along with a flurry of manufacturing data, capping up a week of conflicting economic news that also featured a positive surprise from China.
The Federal Reserve is searching for additional signs of cooling, but not too much cooling, as the U.S. labour market remains tight. This is because the Federal Reserve wants to accomplish a soft landing.
Only a one-in-ten likelihood of a rate increase at the Fed’s next meeting in September has been priced into the markets, but the outlook for the rest of the year is still unclear.
With their increasingly erratic remarks, Fed officials haven’t helped the forecasters’ work much, though a few are scheduled to speak again on Friday and could provide new insights into the atmosphere at the U.S. central bank.
A positive surprise, meanwhile, came out of China, where factory activity in the second-largest economy in the world nudged back into expanding territory, according to a private-sector survey.
But with the property sector and sluggish household consumption still weighing heavily, it’s a little early to celebrate a significant change in recent trends.
Three of China’s top banks reduced interest rates on a variety of deposits on Friday in an effort to reduce the pressure on their margins as a result of the country’s economic problems.
The real estate and finance sub-indices of the blue-chip index led the recovery of China’s stock market in the early Asian morning.
The parade of PMI data continues, with surveys from numerous euro-zone nations due on Friday.
After the poll last month revealed that industrial production was slowing at the sharpest rate since the beginning of the crisis, attention will be focused on the final PMI for the euro zone.
The will-they-won’t-they discussion about the rate outlook in Europe is set to intensify in light of this month’s statistics, as European Central Bank officials warned markets on Thursday that there is still a chance for future rate hikes.
Important events that may have an impact on markets on Friday:
-August non-farm payrolls and unemployment rate in the United States
-International visitors to Spain in July