3 Markets to watch
A hawkish message from Fed chief Jerome Powell at a symposium in Jackson Hole caused a panic sell-off in stock indices and a strengthening of the US dollar. However, this does not mean that investors will complain about a lack of excitement after the weekend. Employment data from the United States, as well as preliminary CPI data from Europe, will keep the USD and EUR on the move in the coming week. As for the EUR, the currency may also be susceptible to fluctuations due to the expected 3-day halt of the Nord Stream pipeline. USDJPY, EURUSD and NATGAS are the instruments to follow in the coming week.
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With the start of a new month, it will be time for the release of data from the US labor market. The NFP report for August will be published next Friday, September 2, at 1:30 p.m. BST. The labor market data supports the Fed's tightening, although unemployment claims have been rising in recent months. The market consensus is for a 300,000 increase in jobs and for the unemployment rate to remain at a 50-year low of 3.5%. It is worth noting that the publication of ADP's employment report will occur again next week after the change in methodology (Wednesday, August 31 at 1:15 pm BST), so investors may use it as a guide ahead of the NFP data. Given the importance of the labor market data for the Fed, which will make a September interest rate hike contingent on it, we can expect the USD to remain volatile.
EURUSD
The European Central Bank has become more hawkish, but this has not provided a boost to the EUR amid the deteriorating outlook for energy security on the Old Continent. Nevertheless, monetary policy remains one of the key factors shaping exchange rates. Next week will see the publication of CPI readings for August from the Old Continent, with attention focusing mainly on the reading from Germany, which will be released on Tuesday at 1 p.m. BST. The headline CPI is expected to accelerate from 7.5 to 7.8%, which could bolster expectations for another 50 basis point rate hike at the ECB meeting in September.
NATGAS
The next phase of the European energy crisis saga will also take place next week. Gazprom has announced that it will shut down Nord Stream's only remaining gas turbine for a 3-day inspection from August 31-September 2, 2022. This means that the flow of gas through the Nord Stream pipeline will be completely halted for 3 days. The main concern, however, is that flows will not resume after that time. Traders should expect natural gas prices to remain volatile during next week's trading. While the impact will mainly be on European gas prices, gas prices in the US may also react with increased volatility.
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