US Stocks Advance, Dollar Slides as Markets Await Key Jobs Data

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Principal Points

• US stocks continue to grind higher as traders and investors eye the jobs numbers for August
• The US dollar moves lower against other currencies ahead of the nonfarm payrolls report

The $51tn US stock market grew larger on Thursday as the three major equity indexes closed in positive territory, with the S&P500 and the Nasdaq Composite closing at new record highs.

The blue-chip S&P500 index advanced 0.3% to a fresh closing high of 4,536.95. The Nasdaq Composite also set a record high by gaining 0.1% to 15,331.18. The 30-stock Dow Jones Industrial Average added nearly 0.4% to 35,443.82. The Dow floats less than 0.2% from its all-time high set last month.

Meanwhile, the US dollar is showing signs of weakness as its value dropped to a four-week low against a basket of six other major currencies. The euro is in its sixth consecutive day of gains against the greenback. Earlier on Friday, the EUR/USD pair traded at a session high of 1.1884 as the financial markets are positioning for another upbeat economic report.

The nonfarm payrolls for August are expected to have increased by 720,000 new jobs to the labor market. The optimistic number anticipated by economists polled by Bloomberg would be a result of the recovering economy and the consistent stimulus injected by both the US central bank, and the US government.

Bitcoin Continues To Hover Around the $50,000 Mark

A miss on the expected jobs figures would most likely disorient the Federal Reserve’s vision for unwinding the pandemic-era stimulus of $120bn in monthly bond purchases. A lower-than-expected number, according to analysts, could spark stagflation fears due to a possible slowdown in economic growth coupled with a relatively high level of unemployment and stubborn inflation.

Some economists fear the Delta virus could dent the economic expansion while workers’ demands for wage increases could further fuel price rises. US consumer price inflation kept high at a 13-year peak of 5.4% in July.

The Federal Reserve will also be scrutinizing the jobs report as well as the unemployment report scheduled for released an hour before the market opens. Fed Chairman Jerome Powell has previously stated Fed officials were largely optimistic toward the economic recovery and that has prompted them to consider dialling down the ample monetary support before the end of the year.

In Europe, the broad Stoxx Europe 600 marched higher on Thursday. The pan-continental index added 0.3% to close at 474.60. Major European bourses also pushed to the upside as investors digested the recent high-inflation report for the euro area. London’s FTSE100 finished the day up 0.2%, while Frankfurt’s DAX and the CAC40 in Paris ticked higher by 0.1% each.

Brent crude, the international oil benchmark, advanced 1.6% Thursday to $72.76 a barrel. The move was underpinned by a resolution between Opec and its allies to provide 400,000 additional barrels a day until late 2022 to meet an expected increase in demand.

Gold prices have been gyrating near $1,810 to $1,815 per troy ounce this week as market participants are monitoring the latest developments on the Covid-19 front along with the flurry of economic data from around the world.

Bitcoin’s price appears stuck near the $50,000 mark as the recent rally has stalled over the past couple of weeks.