The nonfarm payrolls miss for September is already kicking expectations of rate hikes by the Fed further into the future. The euro cheered up a bit, strengthening vs. the dollar after the news. Even the British pound regained some of the ground lost overnight, when it fell by 6% in a matter of minutes in what the media said was a "flash-crash" event.
As usual, the Fed will look beyond the U.S. borders when it takes its decision on interest rates. In Europe, there has been turmoil because of reports that European Central Bank policymakers are already thinking about tapering their extraordinary monetary support.
Still, the reports do not carry a lot of weight (yet). The accounts of the latest ECB Governing Council meeting show that the members were keen to reassure markets that the central bank will continue its asset purchases until inflation rises again close to its target.
This could be a long way off, if energy prices remain around the same levels they are at now and there are no food-price shocks.
Capital Economics economists reaffirmed their forecasts for a six-month extension of the ECB's asset purchases. They believe the central bank will announce it in December, and that it will maintain the current pace of purchases of €80 billion ($89 billion) or even increase it next year if the economy performs worse than expected.
For the moment, however, the Fed doesn't have to worry about the health of the eurozone economy, and that makes a welcome change. We had some positive surprises today from the single currency area: German industrial production jumped by 2.5% in August, compared with expectations for a 1% rise.
What is even better, industrial production in France also increased by 2.1% month on month vs. consensus expectations of a meager 0.6% increase. In Spain, industrial output was up 1.4% after having been forecast to fall by 0.1%.
These data indicate that the ECB's easy-money policy is working, but that doesn't mean the central bank will taper policy right away.
Another area that has suffered from volatility in the past when the Fed tightened monetary policy has been the emerging markets. But this time around, they have had plenty of time to prepare for the Fed's move.
Besides, a rebound in commodity prices is set to help those developing countries that rely on commodities exports. These countries are also likely to benefit from still very relaxed monetary conditions elsewhere, as well as possible fiscal stimulus in Western Europe that could mean more imports into developed economies.
One area that is creating a lot of worry is the U.K.'s apparent choice of a "hard" Brexit -- exiting the EU without adequate access to the single market and without guarantees for banks that not much will change.
These worries have weighed heavily on the British pound -- and will continue to do so. But the reality is that there is little the Fed, or any other central bank for that matter, can do to alleviate them.
Editor's Note: This article was originally published on Real Money at 9:14 a.m. on Oct. 7.