Article / 03 June 2016 at 7:00 GMT

Morning Markets: USD holds its breath ahead of jobs data

Editor / Saxo Bank

Morning Markets: Prices


  • France: Services PMI (0750 GMT)
  • Germany: Services PMI (0755 GMT)
  • Eurozone: Services PMI (0800 GMT)
  • UK: CIPS/Markit services PMI (0830 GMT)
  • EU: Retail sales (0900 GMT)
  • US: International trade in goods and services (1230 GMT)
  • US: Employment report, incl. nonfarm payrolls, unemployment rate (1230 GMT)
  • Canada: International merchandise trade (1230 GMT)
  • US: ISM non-manufacturing report on business (1400 GMT)
  • US: Manufacturers' shipments, inventories and orders, M3 (1400 GMT)

Nonfarm payrolls releases are always watched closely, particularly now as the US Federal Reserve appears ready to re-embark on the path of policy normalisation should the data allow them to hike rates. Yesterday's ADP release showed solid gains, boosting sentiment in new York and Asia ahead of today's print. 

Crude oil prices are on the rise following a decline in US supplies, but yesterday's Opec meeting in Vienna was inconclusive with the cartel failing to agree to price-boosting output quotas. 

Stocks were broadly higher in Asia where today's Japanese session saw both the yen and equity markets gain ground on a renewal of upbeat sentiment. mainland Chinese shares also joined the uptrend despite the Caixin Services PMI reading slipping from 51.8 on April to 51.2 in May. 

Ahead of the US jobs report, we have the Fed's Charles Evans out today discussing policy divergence in the wake of the European Central Bank meeting yesterday. According to's Juhani Huopainen, Evans' speech is likely to contain a reference or two to the upcoming Brexit vote, which likely looms large in the Fed's collective mind as central bankers weigh the pros and cons of a hike in June, July, or not at all.

Market signals

Asian session

  • The Opec meeting held in Vienna on Thursday failed to agree on output quotas
  • But a recovery in crude markets gives the cartel scope to leave quotas aside for now
  • Although Opec failed to agree on output curbs, oil rose on a fall in US supply
  • Gains on Wall Street, buoyant oil prices boosted investor sentiment across Asia
  • Japan's Nikkei 225 headed into positive territory on the upbeat investor mood
  • Nikkei 225 gains nearly 0.5%; Shanghai rallies 0.42%
  • China's Caixin Services PMI slipped to 51.2 for May, down from 51.8 in April
  • Shares rallied in Sydney, in a welcome turnaround after two days of losses
  • The S&P/ASX200 was up xxx

Forex ahead

  • EURUSD trading in a tight range around 1.1150
  • Sterling heads slightly lower, trading just north of the 1.44 handle
  • USD weakens versus Japanese yen, sliding towards 108.70
  • AUD heads higher in tandem with Aussie stocks, rallying towards 0.7250
  • USDCAD looking to retake 1.31 on dollar weakness

From the Floor

Yen shift. “The USDJPY selloff continued and touched 108.50”, says Horchani.

Fed watching.NFP could be one of those critical data points for whether we have a July hike”, says Garnry.

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

In opinion

The July meeting is realistically the first possible time for the Fed to hike rates, given that it comes after the June 23 Brexit referendum in the UK, says Juhani Huopainen

Just hot air?

The ECB is saying it will reach the 2% inflation target by 2018, but the market isn't going to buy it that easily, says Max McKegg

Yellow metal loses its shine

Gold had a poor month in May, surrendering a third of is December-May 3 rally in a price correction driven primarily by readjustment of US rate hike expectations, says Ole Hansen.

Cable may be tested
The next GBPUSD support level to look out lies around 1.4330, and a break below that would confirm a double top and possibly send cable into a test of 1.40, writes Kim Cramer Larsson

Winds of change

Denmark's largest energy firm has just gone public, but Dong Energy's future may be overly tied to state subsidies and the ever-shifting political sphere, says Peter Garnry.

Lego workers

 The spotlight is on American jobs on Friday when the US Bureau of Labor Statistics 

issues its monthly nonfarm employment report. Photo: iStock

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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to make sure you're up to date with the latest developments.

03 June
Dr Chris Dr Chris
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