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Daily Wrap Up 10 September 2021

10 Sep 2021 04:40 PM

Stocks slip as bulls lose energy

Equity markets in Europe started off on a positive note this morning as the feelgood factor from yesterday’s European Central Bank meeting was still doing the rounds. The ECB said it would discuss its asset purchase programme in December and that sent out a message that its extremely loose monetary policy will remain in place for several more months. There wasn’t a major amount of bullish sentiment doing the rounds, and the US markets had a positive start too, but they rolled over and that dampened spirits on this side of the Atlantic. The minor losses that stock markets are incurring today need to be put in context of the massive rallies that have been achieved over the summer. In the past few weeks, the Fed and the ECB shied away from mapping out a start date for tapering, but dealers know full well that at some point in the months ahead, the central banks are likely to start using more hawkish language.

The US dollar is still in the red today, but it has recouped much of the ground that lost in the first half of the session. The US PPI rate jumped from 7.8% to 8.3% - a new record high, and the core reading increased to 6.7%. PPI can often be a leading indicator for CPI because if prices are increasing for producers they will probably be passed on to consumers. Keep in mind, the US CPI rate is 5.4%, its highest level since 2008, and the newest inflation report will be published next week. Last month, the Fed didn’t outline a start date for tapering because they felt the labour market still needs assistance, but if inflation keeps ratcheting higher, it could spark chatter the Fed might be forced to alter its language.

Gold is a little in the red on account of the rebound seen in the US dollar in the past few hours. The metal continues to be dragged around by the move in the greenback.

The Canadian dollar is driving higher thanks to the impressive jobs data, the unemployment rate fell to 7.1%, an 18-month low. The employment change report showed that 90,200 jobs were added last month, and that topped the 68,200 consensus estimate. It is worth noting that most of the jobs created were full time too, so that adds to the bullish nature of the report. USD/CAD is down 0.25%.

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