Global macro overview for 04/09/2017

Global macro overview for 04/09/2017:

The August Non-Farm Payrolls data surprised global investors. The headline NFP number was released at the level of 156k, way below the consensus forecast of 180k. The July data was revised to show an increase of 189k from the 209k reported originally although the 3-month average increased slightly to 185k from 181k. Moreover, unemployment increased to 4.4% for the month from 4.3% in July and the Average Earnings Index increased 0.1% on the month compared with consensus forecasts of a 0.2% gain with year-on-year growth unchanged at 2.5%.

The US August labour data often disappoints the initial reading, to be heavily revised upward in subsequent revisions, so investors have not dramatized the sale of the US Dollar. In addition, there is no shortage of votes saying, that slowing down employment means companies are having trouble finding employees. The later published ISM for industry (58.8 points, highest since 2011) pointed to high production and procurement rates, so the need for hands-on work continues to occur. There is still no pressure on earnings, but the most important data for Fed will be released next week in form of CPI inflation data.

The market valuation of the probability of a rate hike in December remained at over 40%. Still, the overall picture of the US economy is good with an indication of possible improvement by the end of the year, or at least better than the current USD estimate.

Let's now take a look at the US Dollar Index technical picture on the H4 time frame after the job data were published. The golden trend line remains the biggest challenge for the US Dollar bulls so far as any attempt to break out above it failed so far. It is quite possible that a lower high was made at the level of 93.35, so the down trend might be continued from the current levels. The next technical support is seen at the level of 91.93.