Morning Markets: GBP counts flash-crash cost ahead of NFP
- UK: September Halifax House Price Index (0730 GMT)
- UK: The August Manufacturing Production (0830 GMT)
- UK: Trade Balance (0830 GMT)
There will be plenty on the sidelines this afternoon awaiting the nonfarm payrolls print for September and front-row seats are likely to be occupied by Federal Reserve board members with hawks sharpening their knives for action if September proves strong.
Consensus is looking at a gain of 176,000 jobs and anything in excess of that will bolster the interest-rate-shift camp. The November 1-2 meeting still looks a bridge too near for a move given the presidential election taking place on November 8, but a strong NFP will put the case for a move in December well above 70%.
Fed intentions certainly played a part in Asia's overnight slide that led Nikkei and Hang Seng down but a fat-finger 6.1% plunge in sterling against dollar to yet another fresh 31-year low was one of those moments that won't fade away soon.
We can't blame Brexit for this one as automation looks to be the culprit but while sterling recovered from a low of 1.1378 (our estimate) to the 1.2450 area, that last figure itself is still far, far below the 'new normal' of 1.30 since we entered the post-Brexit era.
Is the new 'new normal' somewhere around 1.25? One thing is for sure — a Bank of England rate cut is now firmly off the table and governor Mark Carney may need to salve wounds today.
Strong US data has already fuelled dollar muscle this week and more affirmation for the US economy Friday will put sterling under more pressure. Japan's yen meanwhile stopped the rot overnight after a week of steady retreat on the back of the risk-off sentiment.
Elsewhere, both oil benchmarks continue to enjoy that Algiers-led revival after more supportive stocks data helped blast US standard WTI through the $50/barrel area for the first time since June. Gold was still firmly on the defensive going into the European open, however, at just above $1,250/oz while partner-in-crime silver is staring at a 10% fall for the week.
It was a bit of a stinker of an overnight session for Twitter too after its shares plunged some 20% after Walt Disney and Google parent Alphabet reportedly decided against an offer for the social-media platform.
But we have a turbulent 72 hours ahead. The NFP will undoubtedly flavour markets into next week and a US presidential election debate on Sunday is also likely to be a big needle mover.
And, lest we forget, China markets open again Monday after the Golden-Week holiday with Beijing likely taking a dim view of the USDCNH level once again heading beyond the line-in-the-sand 6.7 mark.
And then there is poor, beleaguered sterling of course. That could add up to a potent mix for Monday morning.
- Asian markets were lower after the pound's brief but sharp tumble
- Some blamed reports of the French president urging a tough line on Brexit
- Markets are looking forward to an upbeat US non-farm payrolls figure today
- Japan's Nikkei 225 was down 0.30%
- Markets in China remained closed for Golden Week public holidays
- The S&P/ASX200 slipped 0.3% to 5467.4
- Gold was down for a ninth straight session in Asian trade on expectations of a Fed rate hike
- Opec members and Russia meet next week, and could agree on an oil output cap
- China's foreign-exchange reserves declined more than expected in September
- GBP hit a new 31-year low in a 'flash crash' before regaining lost ground
- The US continued to soar against the yen; it was worth ¥103.8180 at 0520 GMT
- FX trader expectations of a Fed rate hike are driving up the greenback
- The Australian dollar managed to hold above 0.75, but solid NFP data could push it lower
- The Aussie dollar was worth 0.7573 at 0520 GMT
From the Floor
Pound of flesh. "We are going to have to see an official response to the GBP flash crash," says Hardy
Full circle. “Gold is back to its pre-Brexit low on dollar strength,” says Hansen
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
The GBP flash crash will have consequences because the pound is not some penny stock that should be left vulnerable to some devious market manipulator, says Juhani Huopainen
US data D-day
A good, inflationary US jobs report is expected, writes Juhani Huopainen, and a December rate hike looks more probable.
It's difficult to know what triggered GBP's crazy plunge by more than 6% in two minutes, writes the team from Saxo APAC Sales Trading.
Crude cap hopes rekindled
Oil is heading higher, and talk of a meeting between Saudi Arabia, Iran and Russia at an energy congress next week has raised hopes of an output cap, says Michael O'Neill.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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