Morning Markets: Risk sentiment wanes ahead of July jobs data
Watchlist
- Germany June Manufacturing Orders (0600 GMT)
- US June Trade Balance (1230 GMT)
- US July Employment Report (1230 GMT)
Wall Street edged into risk-off mode Thursday prompting a similar move in the Asian session, where equities dipped as investors turned to regional sovereign bonds.
Today's big data release is the US nonfarm payrolls report for July due out at 1230 GMT. Analysts expect a blandly positive print of 180,000 new jobs, down from June's 222,000 but in line with the average rise seen over the past 12 months.
As usual, any major surprises are likely to move sentiment and the US dollar, but the headline jobs number is not the key metric for those looking to get a sense of the US economy's health.
Wage growth and the labour participation rate remain crucial to the whole picture in the US, where large numbers of new positions can obscure the nature of economy still characterised by a falling workforce participation rate and a lack of new "breadwinner" jobs.
USD traders will be basing their moves less on their overall sense of the US economy, however, and more on the plans of the Federal Reserve which has repeatedly signalled that pallid (but rising) inflation remains the main headwind faced by policy normalisation hawks.
EURUSD currently sits just shy of its weekly high at 1.867.
Beyond the NFP, crude oil followed a choppy US session with some consolidation in Asia, while in Washington special counsel Robert Mueller has convened a grand jury to investigate alleged Russian interference in the 2016 election, a new phase for the inquiry and one that reflects a renewed intensity for the "Russia narrative".
Market signals
Asian session
- Asian investors cautious as they await the release of nonfarm jobs data in the US
- Japan's nominal cash earnings fell an annual 0.4% in June, the first fall since May 2016
- The Nikkei 225 was down 0.38% to 19,952.33 at close
- Hong Kong's Hang Seng was up 0.02% to 27.536.20 at close
- Mazda shares jumped about 3% on news of a likely capital partnership with Toyota
- Korea's Kospi Composite headed higher, but failed to regain much of Thursday's slide
- Kospi Composite was up 0.47% to 2.398.10 at close
- RBA was upbeat about the Australian economy in its statement on monetary policy
- Australia's monthly retail sales rose 0.3% in June following a rise of 0.6% in May
- Australia's largest stock, CBA, took a hit on allegations of anti-money laundering breaches
- S&P/ASX 200 regained some early falls; it was down 0.25% to 5.720,60 at close
- RBNZ statement on monetary policy due out next week could impact NZDUSD
Forex ahead
- AUD held onto gains after the RBA statement release, trading around 0.7970.
- USD regained part of its slide against the yen; it was worth ¥110.0640 at 0543 GMT
- EURUSD uptrend remains intact with pair trading at 1.1879
From the Floor
Doves of Threadneedle Street. “Very, very dovish Bank of England, clearly concerned about the implications of Brexit on the economy,” says Hardy.
Wages to rise? “We are entering a new phase where the tightness in many industries in the US should lift wages,” says Garnry.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
In opinion
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The July US jobs report is expected to show nonfarm payrolls increasing at the same rate as the 12-month average, writes Juhani Huopainen.
AUDUSD trends resemble a cycle last seen in the 1970s, and the currency pair has broken a pattern reminiscent of the 1980s, says Max McKegg.
Bank takes a hit
The Commonwealth Bank of Australia, the top lender in Australia, was in the spotlight on news it allegedly breached anti-money laundering rules, explains Saxo's Sydney trading team.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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