08 July 2016 at 11:10 GMT
The beleaguered sterling, nevertheless, continues to struggle against the dollar below the 1.3000 mark. Equities are mildly up as we await the key US data point.
- US June Change in nonfarm payrolls (+175K exp.) (1230 GMT)
- US June Unemployment rate (4.8% exp.) (1230)
- US June Average Hourly Earnings (0.2% exp.) (1230)
- CA June Net Change in Employment; Unemployment rate (1230)
FX majors are in consolidative mode today ahead of the important US jobs data. GBPUSD is locked in a 1.2900-1.3000 range while EURUSD has been trading in Europe within a tight 1.1090-1.1060 range. In USDJPY, 100.00 remains critical support before the psychological 99.00 level. Our FX Strategist John Hardy commented earlier that payrolls need to surprise big either way to impact markets today.
FX Options volatilities
EURUSD vols are a bit higher today in the one-week-to-one-month area after Citi bought a two-week 1.0950 Put in 1-yard EUR this morning. Two-week expiry is the day after the European Central Bank meeting and therefore seems to be a play on ECB stimulus. EURUSD vols have otherwise been sold in the last couple of days, with spot in a tight range. Heads up for nonfarm payrolls today.
There is slow activity across bond markets ahead of the NFP today with European and US government yields generally a few basis points off (higher) than the record levels earlier this week. Corporate bonds also slightly firmer and with some much needed tailwind for financials. ITRAXX subordinated financials while the broader high yield XOVER index isn’t left too much behind with a seven baisis points tightening so far this session.
European indices are trading modestly higher this morning as market attention now focuses on this afternoon’s NFP.
The FTSE 100, however, currently trades 10 points lower as weaker crude oil prices affect the commodity and mining stocks.
Shares in BMW, Volkswagen and Daimler are trading 1-2 % higher as China reported an increase in vehicle sales last month.
Financials lead the gainers today in the EuroStoxx as Italian banks Intesa Sanpaolo, Unicredit and Generali plus Deutsche Bank and SocGen benefit from an easing over Brexit fears.
Air France-KLM has been a notable faller this morning after a decline in traffic numbers for June by 2.1% and also their CFO Riolacci steps down.
US equity index futures also trade slightly positive ahead of the employment numbers this afternoon.
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Will the NFP print at 1230 GMT see a recovery from the May low? Photo: iStock
— Edited by Martin O'Rourke