Global macro overview for 08/10/2018

The behavior of Wall Street on Friday could have been influenced primarily by the bond market, ie their profitability. The behavior of this market should be influenced by the monthly report from the labor market, which was published (as usual on the first Friday of the month). It did not quite happen. The global investors learned that employment in the non-agricultural sector in September increased by 134,000 (180,000 expected). The compliment was employment in the private sector - it increased by 121,000 (versus 185,000 expected). The unemployment rate is definitely less important, but let us note that it amounted to 3.7% (3.8% expected) - the least for 49 years. Investors also pay close attention to the increase in wages, because the higher they will be, the higher the probability of inflation growth and the faster the rate of a rate hike. The wages per hour increased by 2.8% y / y as expected.

Data verification from the previous month raised this data so strongly that added to the numbers from September gave an increase in employment in the cross-section of two months. In addition, the hurricane that attacked the US East Coast in September significantly distorted the data.

Most often (after increased volatility just after the publication of the labor market report) the stock market ends the day with slight changes in indices. Definitely more often, the publication of the report strongly affects the behavior of the currency market. This time the currency market practically did not react and the indices fell. As always, in the end, the scale of decreases was clearly reduced, but NASDAQ drew a double-top formation forecasting bigger drops. The reason for the discount were constantly increases in bond yields.

Let's now take a look at the NASDAQ technical picture at the H4 time frame after the Friday fever is now gone. The Double Top formation is still in play, at least as long as no new high above the level of 8,102 is made. The nearest technical support is seen at the level of 7,982 and in a case of a deeper pullback in the uptrend - at 7,932. Please notice the clear bearish divergence between the price and the momentum oscillator that supports the bearish case for now. The larger time frame trend remains up.

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