Investors and speculators have moved to the sidelines today, ahead of tomorrow morning’s Non-Farm Payrolls report. Hesitation to jump one way or the other is being reinforced this morning by the Bank of England’s policy committee report, which cited a strong pound sterling as a worry about the economy of the United Kingdom. This plays to concerns that the strong dollar will continue to stifle corporate overseas profits and commodity prices. Some analysts had held out the possibility that the BoE would beat the Fed to the punch, and be the first major central bank to rate rates from near-zero.
Extra importance is being placed on tomorrow’s employment numbers, as it is being seen as the largest factor in the Fed’s decision whether or not to raise interest rates at next month’s meeting. Uncertainty has been injected into the equation, as the ADP private sector payrolls report came in well under expectations. A non-farm payrolls report substantially under 215,000 could stave off an interest rate hike until December, or as far as next spring. First-time jobless claims this week rose by 3,000 applications to 270,000, but this is still a very healthy reading that adds fuel to expectations of a September rate hike.
Gold prices continue to be choppy in a narrow band under $1100 an ounce. Stocks have also been trending sideways in a jittery mood as well, as D-Day for the presumed Fed rate hike nears. Conflicting messages from Fed officials this week have done nothing to steady the nerves of traders.
Some point towards gold’s inability to stage a major rally this summer as a sign that its safe haven appeal is gone. But Matthew Lynn notes that all the crises we’ve seen recently have been contained to their respective regions, and have had no significant impact to the global economy. Reuters notes that Greece is seeing a tourism boom this summer, with many who were interviewed saying they specifically chose to vacation in Greece to help inject more money into the economy.