The week promises to be interesting, both on the stock market and in Forex.
Of course, the highlight of the week will be the U.S. labor market report. The data on employment outside the agricultural sector will be released, traditionally, on Friday. With recent reports and concerns that the labor market recovery has slowed down and the number of initial jobless claims last week was just over one million, and new cases of coronavirus in the U.S. for several days in a row more than 40 thousand, labor market data will be looking forward.
According to the consensus forecast, the U.S. economy created 1.4 million new jobs, below July's numbers. However, unemployment is expected to decline from 10.2% to 9.8%. Even if it is not considered as a significant decline, it is better than stabilization of unemployment, and more than growth.
There are also suggestions that the report's data will be weaker than expected, as the aforementioned increase in COVID-19 cases and recent data on low consumer confidence give ground for doubts. Especially in the prospects for new employment.
Inflationary indicators are expected in Europe and will be released tomorrow. Price growth is expected to remain moderate, but unemployment rates are expected to show slight growth according to the consensus forecast.
The reason for concern in the EU is the fact that the federal government's package of measures to rescue small and medium-sized companies worth a billion dollars has so far barely reached the companies affected by the Corona crisis.
To date, only one percent of the €24.6 billion subsidy fund budget has been paid to companies, as can be seen in the German federal government's response to the Augsburger Allgemeine inquiry. According to this response, by the end of August federal payments of the Bank only 248 million euros. That is considerably less than the declared amounts.
Against this background, a real scandal broke out in the German government. The reason is very clear, the financial aid program is hastily created and not ideal. At the moment, the assistance has been provided to the companies that suffered greatly in April and May. In fact, the crisis did not hit the companies unequivocally; financial losses often reached many companies late. The leader of the green parliamentary group, Catherine Goering-Eccardt, accused CFM's federal minister of economics, Peter Altmaier, of failure because the aid program adopted by the Bundestag had failed due to too bureaucratic and unrealistic demands on applications.
As we can see, we have a controversial and interesting week ahead of us. Volatility will certainly increase, but the euro has more trumps at the moment, and if the U.S. "nonfarm" disappoints, there is a good chance of seeing the rate of $1.12 per euro as early as this Friday.
Japanese Prime Minister Shinzo Abe, the longest-serving government official and the author of the famous Abeonomics incentive strategy, resigned for health reasons.
He came to power in late 2012 and introduced three main instruments of his "Abenomics": a large-scale easing of monetary policy, budget expenditures and structural reforms - to revive the world's third largest economy after several years of weak growth and decline in prices.
Japanese observers are divided over its success. The Central Bank stimulus program has improved business sentiment and weakened the yen, giving exporters unexpected profits that have translated into salaries and new jobs.
But the country is also sinking deeper into recession, and Abe is leaving behind a pile of unfinished business. Investors want to find out who can succeed him and what will happen next with "Abenomics".
Against this worrisome backdrop, Japanese investors are returning the funds to their homes. Japan is famous for its yen as a protective currency, as the country of the Rising Sun is one of the world's largest creditors.
World-famous investor Warren Buffett also did not pass by this event. His, no less famous, the company Berkshire Hathaway Inc. acquired 5% of shares in each of the five largest trading houses in Japan for a total of more than 6 billion dollars. Obviously, Buffet is diversifying its activities, which would make Berkshire less dependent on the American economy.
"The five major trading companies have many joint ventures around the world and are likely to have more," Buffet said in a statement. "I hope there may be opportunities for mutual benefit in the future.
"Their low valuation could have been attractive," said Norihiro Fujito, chief investment strategist for Mitsubishi UFJ Morgan Stanley Securities in Tokyo. "But it's not like Buffett to buy all five companies, not choose a few.
Does Buffet know something? In any case, the Japanese yen this week will be in the epicenter of attention!
Despite the fears, Hurricane Laura never made it to the heart of the U.S. refining sector and related infrastructure in the Gulf of Mexico. As the hurricane reached the Louisiana coast, and as it moved inland, the elements quickly weakened. As a result, the damage from this event was much weaker than expected.
Last weekend, representatives of the refinery announced plans to resume refining, and oil companies announced their intention to increase production at offshore fields to compensate for "downtime" and fulfill their obligations under contracts.
Since the topic of possible failures in oil production in the USA due to natural disasters has been relegated to the background, the attention of market participants is shifting to the previous fundamental factors. These are still the suppressed demand for hydrocarbons from the global economy, as well as production growth in OPEC+ countries and the USA in the near future.
Additional pressure may be exerted by the news that several more gas and oil fields have been found in Saudi Arabia, to be more precise - two. The State Oil Company Saudi Aramco reported the discovery of two new oil and gas fields in the north of the Middle East Kingdom, according to Energy Minister Prince Abduliz bin Salman on Sunday.
Thus, oil prices will remain under pressure, waiting for a weighty driver.