07 October 2016 at 11:27 GMT
The sharp drop of the GBP overnight laid the foundations for a turbulent day. GBPUSD flash crashed 6.1% amid thin liquidity in the Asian session. In fact, European markets are trading lower ahead of this afternoon’s US nonfarm payroll data.
A bullish surprise is still in the cards and would add to Wednesday's strong ISM non-manufacturing release, which again would increase the likelihood for a Fed rate hike in November and keep the heat on GBPUSD.
- US September Change in Nonfarm Payrolls (172,000 expected GMT1230)
- US September Unemployment Rate (4.9% expected GMT1230)
- US September Average Hourly earnings (GMT1230)
- Canada September Net Change in Employment; Unemployment rate (GMT1230)
Very edgy trading in most G10 currencies following the GBP crash overnight.
EURUSD: EURUSD is seen flat at 1.114, erasing the losses of the early morning. USD index getting more strength, having breached above 97 in anticipation of US non-farm payrolls coming out at 12:30 GMT today. GBP: Cable (GBPUSD) continues to be traded lower after a failed attempt to breach above 1.2475, currently bouncing widely around 1.23-1.235 levels.
While markets are still looking for the grounds of the overnight move, hard talks arising around BoE monetary policy may get shifted from potential rate cut and funding of country’s account deficit equal to 6% of GDP. GBPJPY traded near 128.16, EURGBP – above 0.90. NZD attempting to recover during the latest hour, bouncing from the minimums of 0.71 to 0.7145 in NZDUSD, which is still making it nearly -0.3% during the day.
FX Options volatilities
GBPUSD vols spiked with the very disorderly spot market. Market continue to be very illiquid and vols are reacting quick to moves in the underlying
European markets are trading lower ahead of this afternoon’s US non-farm payrolls data. STOXX Europe 600 is down approx. 0.90% with Energy and Financial stocks outperforming. The overnight move in sterling is supporting the FTSE which is currently up nearly 1%.
TGS is up 4.5% after a positive trading update where the company raised 3Q guidance. Remaining within the energy sector, Total is roughly unchanged after confirming the sale of its chemicals unit to Carlyle Group for $3.2 billion.
Vodafone is to buy Spectrum in India for INR 202.8 billion to enhance their capacity and data speed in the region.
A number of companies have been upgraded / downgraded, notably:
Schibsted - removed from Goldman’s conviction list – down 4%
Easjey - cut to neutral by BofAML – down 4%
DS Smith – Barclays start coverage with overwight – up 3.5%
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.
The future of GBP and EUR remain uncertain, but one
can still have both in one's hands.. Photo: iStock
— Edited by Clemens Bomsdorf