Article / 31 August 2016 at 7:00 GMT

Morning Markets: Jobs data versus the greenback

Editor / Saxo Bank

Morning Markets: Prices


  • Germany: Unemployment Report (0755 GMT) 
  • Eurozone: Consumer Price Index (0900 GMT) 
  • US: ADP Employment Report (1215 GMT) 

Tuesday saw the European Union levy a €13 billion tax claim against Apple, with the ruling exposing fissures in the EU's tax regime. US corporations had long been able to essentially fix their taxation schemes in low-tax havens such as Ireland and Luxembourg, but the European Commission has now ruled that global firms are exposed to EU taxes in the individual nations in which they do business rather than funneling revenues through specific corporation-friendly tax regimes.

Today sees ADP release its latest jobs data for the US. The ADP figures are viewed as an important though sometimes unreliable gauge of the subsequent monthly nonfarm payrolls print, and today's release is widely expected to show a softer but still healthy pace of growth for the US private sector in August. 

In foreign exchange markets, the USD rally continues with dollar/yen regaining the 103.00 handle overnight. In commodities, crude oil tumbled after yesterday's inventories data and now sits around $46.25 – below the trigger of Ole Hansen's short SaxoStrats trade published Monday. 

We also have unemployment data for Germany out at 0755 GMT today as well as Eurozone CPI data at 0900 GMT. Both releases will be key for investors seeking to measure the impact of the UK's Brexit vote on Continental economies, among other factors. 

Market signals

Asian session

  • NZ business confidence came in at 15.5 points, slightly down from last month's 16
  • Australia's monthly private sector credit rose 0.4% as expected
  • Big miners pull ASX 200 down by 0.83%
  • Britain's consumer confidence rebounded slightly in August, rising to minus 7 points
  • Japan's monthly preliminary industry production was unchanged in July (up 2.3% in June)
  • Asian markets opened mixed, although the Nikkei was up on a weaker yen
  • US Consumer Confidence Index was at its highest level – 101.1 – in almost a year
  • Oil prices fell on Tuesday and also in Asian trading 

Forex ahead

  • The Aussie took a hit; it was 0.7515 in early Asian trading before edging up
  • The USD hovered near a three-week high against a basket of currencies
  • USD extended overnight rally against JPY as far as 103.230, its highest since July 29 
  • GBP tumbled below the 1.31 handle versus USD overnight
  • EURUSD declines continue after Fischer remarks taken as hawkish

From the Floor

USDJPY options.We want to hold for the big gains post Bank of Japan on September 21”, says Hardy.

Dollar surge.Before we get too carried away by the latest dollar move, this could be short-covering”, says Larsen. 

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

In opinion

While Brexit is still a risk factor, no smoking gun is expected in today’s unemployment data for Germany. The consensus for August is that it will hold steady at 6.1%, writes James Picerno.

Parity party
With dairy prices rising strongly while iron ore appearing to be topping out, there seems to be a trading opportunity to sell AUDNZD with parity as a target, says Max McKegg.

Keynes redux
Economists advocating greater government spending as a way to generate growth have Stephen Pope scratching his head.

Sentiment signal
Rise in US consumer confidence shows the country is on a firm footing towards growth, writes the team at Saxo APAC Sales Trading.

Apple's tax setback

The EU Commission has hit Apple with a big penalty but while that will hurt, it is China that remains the focal point for the technology giant's blueprint says Martin O'Rourke.



Happy shoppers... a gauge of US consumer confidence rose to the highest level in
nearly a year in August. Photo: iStock

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