There is no doubt what was the key event last Friday. The nonfarm payrolls data positively surprised. In accordance with such strong signals from American labour market it’s virtually inevitable that the hike shall take place in December.
The reading of NFP topped consensus by 91k. Such result it’s extremely astonishing, especially when you look at the previous poor data for September. Taking into account the last FOMC’s statement, raise of interest rate on meeting in December seems to be definite. Only the unexpected collapse of Chinese economy could dissuade Fed from such decision. So far everything indicates that situation in China has been stabilizing. Due to such expectation Dollar has been significantly strengthening against all currencies.
Friday’s weekly report on number of active oil rigs in the US pointed to its 11th subsequent fall. Nevertheless, market did not react on this data due to low and expected change. However, more important for WTI price was payroll report which triggered dollar’s strengthening what means lower demand for American oil.
Closing of session on Wall Street brought mixed results. The biggest winners were banks, which gained a lot as investor bet hike of interest rates will enable them increase profits. On the other side were companies form utilities sector as well as energy industry, which were losing due to dropping commodities prices, stronger dollar and higher bonds yields.