Markets Prepare for NFP, Britain for Empty Shelves

3 Sep 2021

Markets have been waiting for today all week. The US labor market statistics, of course, will not provide any definitive answers. It is unlikely that it will provide answers to even intermediate ones, but it may well change the attitude of the markets regarding the foreseeable future. We are talking, of course, about the September meeting of the FOMC. It is through his prism that today's data will be viewed.

Let us remind that weak data will be a signal that Powell was right and it is not the time to tighten monetary policy, because it is necessary to continue the noble mission of saving the economy. The US stock market, however paradoxical it may sound, will gladly accept weak NFP numbers.

But buyers can get depressed over great data. Because in this case, the markets may revise the chances of starting the reduction of the quantitative easing program in the direction of an earlier development of events. This, in turn, may become a reason for the decline in prices on the US stock market and the strengthening of the dollar. So the trading plan for today for the dollar and the US stock market looms more or less clearly.

Meanwhile, Britain continues to enjoy the fruits of Brexit. British food manufacturers and supermarkets warn that empty shelves could persist during the holiday season at the end of the year unless the government takes action to alleviate the shortage of workers and truck drivers. The Trucking Association said the Kingdom is short of roughly 100,000 truck drivers, 20,000 of whom are EU citizens who left the country after Brexit.

So selling the pound continues to be one of our favorite trading ideas. In this regard, we recommend paying attention to buying the euro pound. After the inflationary data for the Eurozone, published this week, many began to look askance towards the ECB with its ultra-soft monetary policy. It's no joke, industrial inflation in the Eurozone exceeded 12% (!) YoY - even the United States does not allow itself that. As a result, the ECB meeting to be held next week on Thursday unexpectedly sparkled with new, positive colors for the euro.