10 March 2017 at 12:25 GMT
Today's nonfarm payrolls from the US are the main numbers to be watched and have potential to affect all asset classes. Most important for the USD action are the average hourly earnings as it could suggest higher domestic inflationary pressures for the longer outlook.
The median of new predictions from Bloomberg poinst to an increase in the headline nonfarm payrolls figure of 230K, compared with 196K before the ADP release earlier this week. Average hourly earnings are expected at +0.3% month-on-month, compared with +0.12 previously.
European stocks rose before the US payroll data.
- US Nonfarm payrolls, avg hourly earnings (13:30)
- Canada labour force survey (13:30)
EURUSD: : The euro has had a volatile ride within its recent range against the dollar, as markets perceived a hawkish tilt from European Central Bank president Mario Draghi during Thursday’s press conference which saw a selloff in Bunds and pushed EURUSD higher to test above the daily 55-day moving average at 1.06113 level.
USDJPY: The yen dropped to a seven-week low after the strong ADP figures and speculation ofa stronger NFP reading today. The pair is building steam for a move higher after breaking the important resistance level at 115, currently just shy below 115.50 – the mid-January high.
GBP: GBPUSD remains heavy on Brexit concerns. Consumer inflation expectations changed the picture a little despite mixed economic data for January. A quarterly Bank of England inflation expectation survey saw the 12-month outlook hit a three year high of 2.9%.
FX Options volatilities
Volatilities are trading sideways ahead of today’s nonfarm payrolls.
They traded a bit softer in the front-end yesterday after the ECB meeting. There was a bigger buyer of 3-month EURUSD ATM at 9.4 yesterday in +500mio EUR, but is today lower now at 9.2.
Risk reversals in euro pairs have shifted less towards puts after yesterday’s ECB meeting, with 3-month 25d RR in EURUSD now at +1.8 for puts vs. +2.1 yesterday. Monday EURUSD is at 6.75 vol, implying an expected range of 65 USD pips.
The Norwegian kroner has weakened the past two weeks, and today’s weak Norway CPI number sent NOK down further. EURNOK vols are well bid today and 1-month ATM is now at 6.5, up 0.5 vol from two days ago.
Stocks rose before the closely watched US payroll data, which is expected to give the Federal Reserve a green light to raise interest rates next week.
Optimism about an economic recovery in Europe gaining traction helped equity indices claw back some of their weekly losses.
Indices were helped by financials and energy shares.
BT Group jumped more than 4% after the British telecoms giant ending a two-year row with the UK regulator.
Shares of oil producer BP rose 1.1% and Royal Dutch Shell PLC gained 1.3% as oil prices (LCOK7) rose 0.7% after plunging earlier this week. Among other movers, Akzo Nobel jumped 5% after Dutch media said PPG may increase its bid.
Bank of Ireland gained 4% after Investec positive commentary on CNBC.
On the downside, Auto Trader lost 4% after CS Cut to underperform with PT 360p. Segro dropped by 4% after announcing a 1-for-5 rights issue at 345p a share.
Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.
Today's nonfarm payoll data will say more about
the current state of employment in the US. Photo: Shutterstock
— Edited by Clemens Bomsdorf