September Is Proving To Be A Jam Packed Month

After last week’s NFP data, the Fed committee members must have looked glum. The NFP was expected to be 178K but the actual value was 169K. The Fed’s forward guidance policy has unemployment at the top of the list. Unemployment has been falling as shown by the unemployment rate but this is not convincing investors at the moment. This uncertainty has been due to the fact that this plunge has been associated with the drop in the labour force participation rate. Investors are not to blame; the data coming out of the US has been mixed.

The US has got a lot on its plate at the moment. This includes tapering, Syria and the debt ceiling. All of this is going to be discussed in September, which makes the situation for the US more difficult.

We should see the dollar rally, until the next FOMC meeting where they may discuss tapering. After months and months, investors are starting to decide by how much the QE will be tapered by. Everyone was speculating on the time, but not the quantity. Quantity is equally important as well as the timing. Then again, there is a strong case for the Fed to taper this month. The Fed may still taper even if the data is mixed. QE will need to be tapered before Ben Bernanke (President of the Federal Reserve) leaves.  The size of the taper should be fairly light.

The Fed’s forward guidance policy also included inflation as one of its main priorities. Recently the inflation level is on the course to stabilizing. Then again is this attributed to rising energy prices? This inflation can then be attributed to the supply side of the economy.

Meanwhile, Syria was providing many trading opportunities. Crude oil and gold were the main trading opportunities. However, recently President Obama has said there could be a potential breakthrough for the crisis in Syria given by the Russian’s.  Russia has proposed that if Damascus destroys its chemical weapons then the US will not need to implement a military strike.

Brent Crude Oil

Markets are currently saying that the US will not go to war. This has been supported by the view by congress. How will this affect markets? The momentum gained by oil should slow, gold is likely to have a neutral bias as Obama has two options which are a Syrian strike or Russia’s proposal.

We shall see what the US will do, in a couple of weeks with both the Syrian situation and the tapering of QE. It should however provide many trading opportunities for the oil, gold and the dollar.

CFDs, spreadbetting and FX can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure you understand the risks. Seek independent financial advice if necessary. Nothing in this article should be considered a personal recommendation. It does not account for your personal circumstances or appetite for risk.

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