For the second time this year some time out of the office has coincided with tumultuous movements in the financial markets. The first was back in January when the SNB removed its Swiss franc ceiling and a summer break has seen a considerable spike in volatility as Asian markets go into a tailspin. Not planning any more extended breaks for the rest of the year so perhaps the rout is over, but there remain a number of things that indicate this is unlikely to be the case. Whilst European indices are expected to bounce this morning, further evidence of a slowing China’s impact on the global economy came overnight in the form of weaker Australian GDP data. This pushed the Aussie down further to a fresh six and a half year low against the US dollar, finding support for now around the 0.7000 level.
Many central bankers have been citing their concerns over China throughout this year and the recent volatility will undoubtedly impact policy making. A rate hike from the Fed this month is looking less and less likely and this week’s nonfarm payroll number will play a huge role ahead of the decision on September 17th. Ahead of this today sees the release of the ADP private payroll data expected to come in at just over 200k and anything weaker than this will only serve to strengthen the argument for a December rate hike at the earliest.