Article / 10 March 2017 at 8:00 GMT

Morning Markets: Nikkei rallies as USDJPY posts pre-NFP surge

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • Germany January Trade Balance (0700 GMT)
  • UK January Manufacturing Production (0930 GMT)
  • US: Nonfarm payrolls (1330 GMT)

Thursday's European Central Bank outing may have seen the euro gain some ground against the dollar, and indeed small dollar declines across much of the G10, but USDJPY picked up steam after crossing the 115 barrier (it currently trades around 115.39) and the yen weakness was matched by a rally in Japanese stock prices with the Nikkei 225 adding 1.48% to its value in Friday's trade.

The main upcoming test for the USD, of course, is today's nonfarm payrolls report out of the US where expectations are high after a strong ADP jobless claims number on Wednesday.

Also on today's calendar are a trade balance release from Berlin and an industrial production figure out of London, both of which are expected to post declines; in Germany's case, a reduction in the country's massive surplus may be interpreted by markets – particularly FX markets – as being another signal of the Eurozone's recovery.

Despite the USD's sagging versus the G10 sans yen, commodity prices continue to lose ground with crude oil posting particular weakness as WTI dips below $50/barrel and Brent crude trades just north of $52/b.

Market signals

Asian session

  • Weak gains on Wall Street Thursday left Asian markets looking elsewhere for direction
  • A higher-than-expected nonfarm payrolls figure should lift US equities
  • Rising US inventories pushed crude prices below $50/barrel
  • Gold hit a five-week low on expectations that the Fed will hike rates next week
  • A looming copper shortage could give weakened prices a lift
  • Japan's Nikkei 225 surged sharply higher, helped by the weaker yen
  • The Nikkei 225 closed up by a robust 1.48% at 19,604.61
  • PBoC governor Zhou Xiaochua warned against overreacting to China's falling FX reserves
  • The Shanghai Composite was down 0.07% to 3,214.48 at 0611 GMT
  • South Korea’s constitutional court has dismissed President Park Geun-hye
  • The Kospi Composite was up by a slim 0.23% to 2,095.95 at 0548 GMT
  • The S&P/ASX200 closed up 0.60% at 5,775.60, thanks to banking and healthcare shares
  • Australian housing finance surged 4.2% higher in January, showing no signs of a slowdown

Forex ahead

  • USDJPY spikes to nearly 115.50 before retracing to its present 115.30-area level
  • A healthy nonfarm payrolls figure could give USD a boost
  • Falling commodity prices weighed on AUDUSD, which held above 0.75
  • AUDJPY gains by 0.55% to 86.71 as yen weakness spurs Japanese equities
  • Sterling downtrend continues with cable heading for 1.2150
  • USDTRY loses 0.48% as lira posts rally

From the Floor

Euro stregthens.The euro [is] much higher across the board on the shift in the rate outlook,” says Hardy. 

Dax rangebound.In terms of the Dax, it is very much range trading here. There is not a lot of action. What Draghi said yesterday did not really move the needle,” says Garnry 

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

In opinion

1...2...3

The rise of Germany's Social Democrats attracts little attention, but a win by the party could erode the cost advantages that German industry enjoys, says Juhani Huopainen.

Cliffhanger currency

EURUSD could be standing on the edge of a cliff and staring at a sharp tumble to just 0.82, warns Max McKegg.

EUR in luck

European Central Bank president Mario Draghi remains far from hawkish, but it would appear that even he can't talk the common currency down says John J Hardy.

Hourly earnings in focus

Today's nonfarm payrolls print could prove crucial for the USD, but its important that traders look beyond the headline writes John Acher.

Snap's wild ride

It's been a bumpy week for shares of social media firm Snap, but the price action might be obscuring other interesting aspects of the stock, states Clemens Bomsdorf.

Nonfarm payrolls

Today's US jobs print is expected to reinforce perceptions of outperformance in the world's largest economy. Photo: Shutterstock

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