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Greenback consolidates before US jobs

Arnaud Masset

Market Brief

G10 Advancers and Decliners vs USD
CAD 0.28
AUD 0.20
GBP 0.15
NZD 0.05
CHF -0.07
JPY -0.11
SEK -0.20
NOK -0.22
EUR -0.25
DKK -0.25
Global Indexes Current Level % Change
Nikkei 225 Index 17725.13 0.02
Hang Seng Index 21426.43 2.78
FTSE futures 6071 0.41
DAX futures 9592.5 0.88
SMI Futures 8553 0.69
CAC futures 4470.5 1.09
S&P future 1918.8 0.1
Global Indexes Current Level % Change
Gold 1109.9 -0.33
Silver 14.51 -0.22
VIX 22.55 -7.96
Crude wti 45.55 1.81
USD Index 96.22 0.03

Today, all eyes will be on the pending US jobs data. Amid a good ADP read on Wednesday, the consensus for the NFP is a strong 201k (vs. 173k last month) with stable unemployment rate (5.1%) and higher wages (2.4%y/y versus 2.2%y/y in August). Given the historical pattern, there is a good chance that the 173k for August will be revised higher. It has been a quiet week in the FX market as traders remained on the sideline ahead of today’s highly sensitive job report. A stronger read would revive expectations for a rate hike in December. After losing almost 50bps, US 10-year bonds stabilised slightly above the 2% threshold, around 2.0473%. The policy-sensitive 2-year yield has been unable to successfully break its 200-dma to the downside and is now moving higher, up 3.5bps from Wednesday’s low. EUR/USD is treading water around 1.12 as traders consolidate their positions ahead of the job report. The market is still in shock from the FOMC rate decision and seems reluctant to place any bets before the US NFP read.

USD/JPY fell to 119.50 in New York yesterday before recovering to 120.03 in Tokyo. Overall, the pair continues to trade sideways, right in the middle of its 1-month range. US jobs data will determine whether it is time to pull out resistance and challenge the few supports lying on the downside between 119.06 and 117.85.

USD/CHF is back above 0.9770 after pairing losses due to weak economic data from the US yesterday. Initial jobless claims came in at 277k versus 271k expected, ISM manufacturing printed at 50.2 versus 50.6 expected and 51.1 last month. Finally, ISM price paid came in at 38 versus 40 median forecast and 39 the previous month. EUR/CHF holds ground above the 50-dma (1.08393), trading at 1.0925 this morning.

In Brazil, USD/BRL stabilised around 4.00 as 1-month implied volatility settled down somewhat to 26.25% from 28.44% a few days ago. The BRL was also helped by a solid Markit PMI manufacturing print of 47 versus 45.8 last month and the prospect of a potential marginal interest rate hike by the BCB.

In the equity market, returns were mixed in Wall Street yesterday. The S&P 500 gained 0.320%, the Nasdaq 0.15%, while the Dow Jones Industrial Average edged down -0.08%. This morning in Asia, the Nikkei and the Topix index are blinking green, up 0.2% and 0.15% respectively. Hong Kong’s Hang Seng rallied in post-holiday catch-up, rising 2.78% during the session. Australian shares are down 1.18%, while in New Zealand, the S&P/NZX edged up 0.14%. In Europe, futures are broadly higher, pointing toward a higher open for most indices. The Euro Stoxx 50 is up +0.95%, the DAX +0.88%, the CAC 40 +1.09% and the SMI 0.69%.

Besides US jobs, traders will be watching Norwegian September unemployment rate, UK Markit/CIPS construction PMI, euro zone August PPI m/m & y/y and US August factory order m/m.

 

Swissquote Sqore Trade Ideas: http://en.swissquote.com/fx/news/sqore

 

Today's Calendar Estimates Previous Country / GMT
SP Sep Unemployment MoM Net ('000s) 21.1 21.7 EUR / 07:00
NO Sep Unemployment Rate 2.90% 3.10% NOK / 08:00
BZ Sep FIPE CPI - Monthly 0.61% 0.56% BRL / 08:00
IT Istat Releases Italy 2Q House Price Index - - EUR / 08:00
UK Sep Markit/CIPS UK Construction PMI 57.5 57.3 GBP / 08:30
EC Aug PPI MoM -0.60% -0.10% EUR / 09:00
EC Aug PPI YoY -2.40% -2.10% EUR / 09:00
BZ Aug Industrial Production MoM -1.60% -1.50% BRL / 12:00
BZ Aug Industrial Production YoY -9.50% -8.90% BRL / 12:00
US Sep Change in Nonfarm Payrolls 201k 173k USD / 12:30
US Sep Two-Month Payroll Net Revision - - USD / 12:30
US Sep Change in Private Payrolls 197k 140k USD / 12:30
US Sep Change in Manufact. Payrolls 0k -17k USD / 12:30
US Sep Unemployment Rate 5.10% 5.10% USD / 12:30
US Sep Average Hourly Earnings MoM 0.20% 0.30% USD / 12:30
US Sep Average Hourly Earnings YoY 2.40% 2.20% USD / 12:30
US Sep Average Weekly Hours All Employees 34.6 34.6 USD / 12:30
US Sep Underemployment Rate - 10.30% USD / 12:30
US Sep Change in Household Employment - 196 USD / 12:30
US Sep Labor Force Participation Rate - 62.60% USD / 12:30
US Fed's Patrick Harker Gives Opening Remarks in Philadelphia - - USD / 12:45
US Sep ISM New York - 51.1 USD / 13:45
DE Sep Foreign Reserves 500 536.2 DKK / 14:00
DE Sep Change in Currency Reserves - -47.0b DKK / 14:00
US Aug Factory Orders -1.20% 0.40% USD / 14:00
US Aug Factory Orders Ex Trans - -0.60% USD / 14:00
US Fed's Bullard Speaks on Monetary Policy in New York - - USD / 16:30
US Fed's Fischer Addresses Boston Conference on Monetary Policy - - USD / 17:30
Currency Tech
EURUSD
R 2: 1.1561
R 1: 1.1330
CURRENT: 1.1170
S 1: 1.1017
S 2: 1.0809

GBPUSD
R 2: 1.5659
R 1: 1.5383
CURRENT: 1.5151
S 1: 1.5089
S 2: 1.4960

USDJPY
R 2: 125.86
R 1: 121.75
CURRENT: 120.08
S 1: 118.61
S 2: 116.18

USDCHF
R 2: 1.0240
R 1: 0.9903
CURRENT: 0.9778
S 1: 0.9513
S 2: 0.9259
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