Gold prices are slightly lower in early trade to kick off the new trading week. Stocks are seeing some selling pressure again today while crude oil is higher. The dollar index is trading near the unchanged mark as of this post.
Markets appear to have calmed down following last week’s volatility, although whether or not things remain calmer remains to be seen. Markets seem to be once again turning their focus to the Fed and its plans regarding interest rates. Expectations for a hike have diminished, although a hike is certainly still on the table. Markets may potentially get more clarity on the interest rate outlook this week. Markets and the Fed will have plenty of additional economic data to consider this week.
Data set for release this week includes the latest readings on: Chicago PMI, Dallas Fed Manufacturing, Motor Vehicle Sales, PMI Manufacturing, ISM Manufacturing, Construction Spending, the ADP Employment Report, Factory Orders, the Fed Beige Book, Weekly Jobless Claims, ISM Non-Manufacturing, PMI Services and Friday’s Non-Farm Payrolls data for August.
While all of this data may be considered important and could potentially help sway the Fed one way or the other, Friday’s Non-Farm Payrolls data will likely carry the most weight. Consensus estimates are looking for 223,000 jobs added with a slight downtick in the unemployment rate to 5.2 percent.
A better-than-expected jobs number could potentially influence the Fed to raise rates in September or possibly December. A significant miss on this report, however, may potentially give the Fed reason for pause.
In addition to the data stream, investors will continue to watch China closely. Reports have indicated that the Chinese Government may abandon its stock market intervention. Recent, aggressive measures implemented by China have not, thus far, produced the desired effect. Following the selling and volatility seen last week, one has to wonder if things could get even worse should China not put any further measures into action.
If Chinese markets remain calm, U.S. markets may be in a holding pattern until more clarity is seen regarding interest rates. Economic data this week could potentially be a major contributing factor to the Fed’s decision and investors may feel more confident about the Fed’s intentions by week’s end.
Gold has pulled back from its recent high, although the market does look possibly poised for further upside. Gold has made a series of higher lows which may potentially be a sign of dip-buying in the market. Gold, like other markets, will likely take its cues from Chinese markets and any further indications from the Fed concerning its plans with interest rates.
