Article / 08 July 2016 at 7:00 GMT

Morning Markets: Cautious optimism ahead of NFP




  • UK May Trade Balance (0830 GMT)
  • US June Employment Report (1230)
Friday is a bumper day for economic releases, chief among them the eagerly awaited US nonfarm payrolls numbers which are expected to show that some 180,000 new jobs were created last month. Though a feeling of cautious optimism prevails ahead of the 1230 GMT release this is tinged with nervous memories of last month's shockingingly low 38,000 result. If we get another hefty disappointment then it's adieu to policy normalisation prospects for a very long time into the future.

European markets haven't opened yet but we've already had one disppointing data print – German's trade surplus fell for a second consecutive month as exports declined 1.8% compared to expectations of a 0.4% increase. That adds up to an unpromising start to a day where European bourses are expected to open mildly lower.

While the primary focus this Friday is the US nonfarm payrolls, Brexit and its implications for the British and European economies remains a nagging theme. Today's Financial Times carries an exclusive interview with the Belgian prime minister that indicates that the UK faces great difficulty in negotiating a good exit deal from the bloc: The vote to leave the EU, the prime minister says, has opened a political “black hole” in Westminster and Europe’s leaders will not bend to help it out. Hard times indeed.

Market signals

Asian session

  • UK consumer confidence fell its sharpest in more than 20 years since the Brexit vote
  • In a one-off special GfK Consumer Confidence Barometer, the index fell 8 points to minus 9
  • Japan's May current account surplus narrowed to ¥1.41 trillion, below the ¥1.52tln expected
  • The country's price-adjusted real wages also slowed by minus 0.2% year on year
  • Australia cut its 2016 price forecast for iron ore by nearly 2% to well under current prices
  • Oil held near $45/barrel after tumbling to the lowest level in almost two months
  • Copper posted the biggest three-day loss in more than two months
  • Gold headed for the first back-to-back daily drop since the Brexit vote
  • Gold was $1,356.76 at 0426 GMT after losing 0.2% on Thursday
  • ASX200 fell as much as 0.2% on oil price, but recovered to be up 0.04% 

Forex ahead

  • Australian dollar is proving resilient against threat of credit rating downgrade
  • AUDUSD was 0.7490 (up 0.14%) at 0600 GMT

From the Floor

Bernanke in Japan. “Kuroda and Abe are looking for the next phase to bring back inflation — it could mean helicopter money”, says Hardy.

Equities mixed. “Even if we get a strong NFP, it is just one of many”, says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

As uncertainty over Europe continues to deter investors, will a meagre US monthly payroll increase turn around the sentiment, asks Juhani Huopainen.

Intervention prevention
The Japanese government is unlikely to let the Bank of Japan off its leash to thrash around in the FX market, writes Max McKegg. So USDJPY traders should not hold their breath waiting.

Plan for parity
If UK politicians don't deliver Plan B with a free-trade deal, GBP could reach parity with the dollarwrites CNBC

Nervous start

With Brexit on the wane (but still influencing) and a new whammy of US nonfarm data to come, no wonder Aussie shares weren't sure where to start, reports Saxo's Sydney team


After May’s dismal report will today's US jobs number be another shocker? Photo: iStock

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