John J Hardy
Saxo Bank’s head of FX strategy John Hardy takes a closer look at trends and moves in today’s forex charts, including EURUSD, USDJPY, AUDUSD, and EURSEK.
Article / 07 October 2016 at 3:33 GMT

Morning Report APAC: Strong US jobs data, GBP drops more than 6%

APAC Sales Trading Desk / Saxo Capital Markets

  • US Initial Jobless Claims dropped to a historic low of 249,000
  • Market is now watching for the non-farm payrolls data tonight
  • GBP fell more than 6% in two minutes
  • On strong jobs data, USD found good bidding interest against all currencies 
  • Gold prices hit a fresh four-month low

By Saxo APAC Sales Trading

Economic data of the day (Singapore Time: GMT plus 8 hours)



19:30 – EUR: European Central Bank account of the monetary policy meeting

22:50 – EUR: ECB’s Ignazio Angeloni speaks in Amsterdam 

23:35 – CAD: Bank of Canada’s Carolyn Wilkins speaks at University of Quebec

Overnight news


US: Initial Jobless Claims dropped to a historic low level of seasonally adjusted 249,000, which was below the 256,000 consensus. The market is now watching the non-farm payrolls tonight, which should be a confirmation that the US Federal Reserve will start hiking in December.   


Foreign exchange



GBP had a crazy move this morning which started at 7.06 am Singapore time and dropped more than 6% in two minutes. It’s impossible to say what triggered the move as no news hit the wires but the liquidity was poor to non-existent during that time. The moves were mainly triggered by stops after the initial move lower.

Following the strong employment data yesterday, the USD has found very good bidding interest against all the currencies. That move should continue tonight after the NFP number.

In emerging markets, USD was bid as well against most currencies, although to a lesser extent.

Foreign exchange movement


GBP was the main mover in the volatilities market and 1W jumped 6 vols to 16. The market is extremely wide at the moment and takes longer to recover than spot.

Funds are paying the JPY volatilities now ahead of non-farm payrolls and following the GBP move this morning.




US Treasuries 10-year yield continued to climb overnight, to a high of 1.7442, on continued improvement of US economic data, with initial jobless claims falling to lows. 

After Wednesday's steepening of the bund curve post the news report of the European Central Bank considering tapering, the curve remained stable through yesterday’s trading with little action across the curve. 

UK gilts continued to fall, with 10-year yields rallying to a high above 0.90. 






US stocks barely changed upon close ahead of the jobs report. Stocks sold off in early trade, but recouped much of the losses after ECB's repudiation on its discussion of tapering its bond-buying program. The S&P 500 index edged up 1.04 points to close at 2,160.77, with the materials sector topping the gains.

Twitter Inc. tumbled 20%, after it reported that it won’t draw takeover bids from Apple Inc., Alphabet Inc.’s Google unit or Walt Disney Co. Software company has been the most possible buyer.

Wal-Mart Stores Inc. shares slid 3.2% after the retailer reported a lackluster outlook for 2017 at an investor meeting.

European stocks declined overnight, as airline shares suffered from a profit warning from EasyJet PLC, but bank shares rebounded as ECB had denied that such discussion of "tapering" took place. The Stoxx Europe 600 fell 0.4% to end at 342.82. The FTSE 100 shed 0.5% to close at 6,999.96.

EasyJet shares sank 6.9% after it forecast that its full-year profit could drop as much as 29%, due to a slowing in bookings after terrorist attacks and the plunge in the pound after the Brexit vote in June.

Smith & Nephew PLC dropped by 3.4% after the surgical devices maker was rated to hold from buy at Berenberg, saying it was "more cautious about the company’s organic revenue growth outlook, as well as on margins and earnings growth.”

Asia Pacific Stocks

Hong Kong

Analyst Ratings: 
  • AgBank (1288 HK): Cut to neutral at JPMorgan 
  • Wal-Mart(WMT US) said to baulk at paying $600m in bribe case. Watch out Li & Fung(494), WH Group(288) 
  • Wheelock Ppty(20)'s property in Tuen Mun "NAPA" is granted pre-sale consent 
  • HKEX(388) Jan-Sept average daily turnover for securities market down 42% YoY to HK$67.8bn 
  • Pacific Basin(2343) Q3 ves sel earnings outperform shipping indices 
  • Shanghai Electric (2727) among Chinese firms approaching Fiat Chrysler Automobiles for a possible Comau bid (Reuters
  • Coal: China to scrap plans to build 15 coal-fired power plant projects with combined capacity of 12.4Gw (Xinhua
  • China Aoyuan (3883) Sep contracted sales up 218% YoY to RMB 3.63bn 
  • CMSC (6099) debut today, closed at HK$12.06 at grey market, up  5% against listing price HK$12 
  • Smart-Core (2166) debut today, closed at HK$1.89 at gray market, up 3.3% against listing price $1.83 

Analyst Ratings: 
  • ABC-Mart (2670 JP): Cut to neutral at Daiwa 
  •  Daiseki Eco (1712 JP): Downgraded to neutral at Tokai Tokyo 
  •  Denka (4061 JP): Cut to neutral at Mitsubishi UFJ-MS 
  •  Musashi Seimitsu (7220 JP): Rated new buy at Ichiyoshi 
  •  Seven & i (3382 JP): Cut to neutral at Goldman 
  •  Star Micronics (7718 JP): Cut to neutral plus at Iwai Cosmo 
  •  Takara Bio (4974 JP): Cut to neutral at Nomura 
  • Astellas (4503 JP): Transplant rejection treatment granted orphan drug status by FDA 
  •  DeNA (2432 JP): To sell ‘DeNA Shopping,’ ‘au Shopping Mall’ to KDDI 
  •  McDonald’s Japan (2702 JP): Sep. same-store sales up 11.5% 
  •  Nagaileben (7447 JP): Full-year oper. profit 4.95bn yen vs 4.81bn yen co. forecast; targets 5.11bn yen for current FY 
  •  Nomura Co. (9716 JP): Raises planned full-year dividend to 38 yen/share from 34 yen 
  •  OSG (6136 JP): Reports 9-month results; 3Q oper. profit down 18% to 4.63bn yen 
  •  Pasona (2168 JP): 1Q oper. profit down 39% to 215m yen 
  •  Pocket Card (8519 JP): 1H parent net income 985m yen vs co. forecast 900m yen 
  •  Seven & i (3382 JP), H2O Retailing (8242 JP): Forming capital tie-up; Seven & i will close two department stores, transfer Kansai area dept stores to H2O; Seven & i earnings in line with prelim. figures released last week 


Analyst Ratings: 
  • OZ Minerals (OZL AU) raised to buy from hold at Wilsons 
  •  Woodside (WPL AU) cut to hold vs buy at Morningstar 
  •  Estia Health (EHE AU) cut to underweight vs equalweight at Morgan Stanley 
  •  Spark Infrastsructure (SKI AU) raised to outperform from sector perform at RBC Capital 
  •  Galaxy Resources (GXY AU) new speculative buy at Bell Potter 

  • Chorus (CNU NZ) says Visionstream taking over fiber installations in areas currently serviced by Downer 

Source: CIMB / Bloomberg


GBP had a crazy move this morning, at 7.06 am Singapore time, and dropped more than 6% in two minutes.  Photo: iStock


– Edited by Susan McDonald

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