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NFP higher than expected, US inflation, too?

After a higher-than-expected non-farm payroll report reading, the markets are awaiting the release of the US inflation report this week. These are some of the most important forces driving investors’ sentiment.

Global Markets

Asia Pacific shares were mixed with Chinese stocks rallying while others dropped. Nasdaq 100, S&P 500, and European futures went up while the US dollar rose, and the euro fell. After the higher-than-expected NFP report in the US, investors are now expecting the Fed to announce five interest-rate hikes in 2022 to curb inflation.
In Europe, Klaas Knot, a European Central Bank Governing Council member said that he expects a rate increase from the ECB as early as in the fourth quarter. Last week, ECB’s hawkish attitude was reflected in President Christine Lagard’s comments as she stated that she can no longer exclude a rate hike in 2022.

Gold

Gold rose during the Asian morning session and hit a longer-than-1-week high. The precious metal was supported by the Eastern Europe geopolitical tensions between Russia and Ukraine. Silver and palladium were up as well.

NFP

The NFP report in the US came out higher than expected. The US economy added 467,000 jobs in January contrary to the 238,000 forecasts. The unemployment rate was 4%. The strong US jobs report has helped calm down fears over the course of the global economic recovery from the pandemic. Investors are now turning their attention towards the upcoming US inflation data which include the consumer price index. For investors, high figures could signal a possible start of interest rate hikes by the US Fed.

Crude Oil News

Brent oil fluctuated during the Asian trading session after 7 consecutive weeks of gains pushing oil to reach its highest level since 2014. Oil futures in London were mixed after their climb to highs reaching $94 per barrel. Last week, OPEC+ decided to raise output by 400,000 barrels a day in March. However, the group is struggling to meeting its agreed-on supply levels. Supplies seem to be becoming tighter while oil inventories are falling. Maintenance problems in Libya and the extreme cold and power outages in the US seem to be affecting oil supply.

Bitcoin

Bitcoin, the largest cryptocurrency in the world, rose above $42,000 hitting its highest level in more than two weeks. The digital asset climbed above its 50-day moving average today for the first time in more than the two months.

Investors’ Watch

Investors are watching closely the prospect of the Fed moving ahead with what is expected to be the greatest monetary policy tightening since the 1990s.They are waiting for the release of the U.S. inflation report on Thursday. A reading above 7% is expected, the highest since the early 1980s.

What to Watch out for this Week:

Wednesday:
Cleveland Fed President’s Speech

Thursday:
Reserve Bank of India Rate Decision
Bank of Indonesia Rate Decision
UK Bank of England Governor’s Speech
US CPI, Initial Jobless Claims

Throughout the whole week:
U.S. Companies’ earnings reports (Twitter, Uber, Pfizer, AstraZeneca, Toyota Motor, SoftBank Group, Commonwealth Bank of Australia, Walt Disney & more)