Morning Markets: Nonfarm jobs optimism buoys sentiment
Hot topics: US nonfarm payrolls, US interest rates, USD
- AU Reserve Bank of Australia quarterly monetary policy statement (published)
- DE Industrial production index (published)
- France September industrial production (0745 GMT)
- Spain September industrial production (0800 GMT)
- CH SNB foreign currency reserves (0800 GMT)
- GB Monthly industrial production (0930 GMT)
- GB Trade (0930 GMT)
- US Employment report, nonfarm payrolls, unemployment rate (1330 GMT)
- CA Labour force survey (1330 GMT)
- US Consumer credit (2000 GMT)
Global markets are waiting for a crucial jobs report from the US Bureau of Labor Statistics at 1330 GMT as the key to whether the US Federal Reserve will kick off monetary tightening in December or wait until the new year.
The Fed has kept rate hike expectations alive with hawkish noise despite disappointing jobs growth in August and September, and many analysts say the October nonfarm payrolls data won't need to be especially strong for the Fed to still begin the liftoff next month.
"We had called for December as the first rate hike, and we continue to do so — and we think the jobs growth needed in this (and the next) employment report for the FOMC to follow through on its December hint is reasonably low," writes Saxo Bank's head of macro strategy Mads Koefoed in his preview of the US numbers. "In other words, the FOMC probably does not need to see growth of 200,000 in payrolls to start hiking."
The next Federal Open Market Committee meeting is scheduled for December 15-16.
Optimism about the US jobs data bolstered Asia-Pacific markets.
Asian stock markets were mixed, with the Shanghai Composite up almost 1.8% and Japan's Nikkei 225 also higher at 0657 GMT, but Hong Kong's Hang Seng index fell. US stocks closed lower on Thursday, with many investors warily biding their time before the employment report.
The Reserve Bank of Australia cut its forecast for Australian GDP in 2015 to 2.25% from August's 2.5% and said inflation would fall to within the 2% to 3% range in mid-2016.
Providing further evidence that China's economic slowdown may be hurting exporting nations, German industrial production fell by a seasonally adjusted 1.1% in September, against expectations for an improvement after a 0.6% decline in August.
- The Shanghai Composite headed higher again; it was up 0.52% to 3,541.02 at 0330 GMT
- But the Hang Seng China Enterprises Index lost ground
- The index of Hong Kong-listed China companies was down by 0.72% at 0405 GMT
- Hong Kong's Hang Seng index fell as well; it was down 0.82% to 22,861.20 at 0405 GMT
- Japan's Nikkei 225 was up 0.37% to 19,187.89 at 0403 GMT, buoyed by the weak yen
- A community in Brazil was devastated after a dam burst at a BHP and Vale-owned mine
- The Brazilian tragedy hit BHP shares, and curbred early gains on Australia's S&P/ASX200
- The S&P/ASX200 closed up 0.42% at 5,215.00
- The RBA lowered its forecast for Australian GDP in 2015 to 2.25% from August's 2.5%
- The RBA said inflation would fall to within the 2% to 3% range in mid 2016
- Gold fell overnight to a seven-week low, down 0.2% at $1,104.20/oz
- Crude fell for a second day, pushed lower by stubbornly high US output
- WTI for December delivery fell $1.12, or 2.4%, to $45.20/barrel
- Iron ore was down 0.96% in overnight trade, fetching just $48.71/tonne
- Copper had its sharpest fall in six weeks, retreating 2.4% to settle at $5,011/tonne
- The kiwi dollar has tumbled by 2.5% against the US dollar this week
- Weakness in GBP could persist after walloping on Thursday from a dovish BoE
- Odds of a new trend for GBPUSD up, especially if US payrolls surprise positively
- EURUSD 1.0900 and 1.0800 levels are clear trigger points around US jobs data
From the Floor
GBP hammered. ”The key for markets today...(is) the follow-on from the Bank of England’s extremely dovish concerns yesterday,” says Saxo Bank’s FX chief John J Hardy.
Japan stocks: ”The USD has strengthened, weakening the yen, which has a strong correlation to rising (Japanese) equities,” says Saxo Bank's Lakshmi Thurai in Singapore.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
That figures ... a moderately healthy nonfarm payrolls number will clear the way for the Federal Reserve to do whatever it wants with interest rates next month, says Juhani Huopainen.
All eyes will be on US nonfarm payrolls today, with the market expecting 185,000, and average hourly earnings will attract plenty of scrutiny as well, writes Saxo Singapore's trading team.
It will only take a small nudge from the US jobs data, not necessarily a 200,000 jobs increase, for the FOMC to raise rates next month, writes Saxo's macro strategy chief Mads Koefoed.
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Monetary bazookas or not
An "inevitable" global financial crisis is on the way, and the deflation risk from low oil prices will lead central banks revert to "pretend-and-extend" policies, writes Christopher Dembik.
Q4 ETF rebound
Exchange-traded funds' portfolio returns bounced back in the beginning of the fourth quarter, with both equities and bonds contributing positively, writes Teis Knuthsen.
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