Market Roundup
• US Non-Farm Payrolls Sep, -33k, 90k forecast, 156k previous.
• US Private Payrolls Sep, -40k, 83k forecast, 165k previous.
• US Manufacturing Payrolls Sep, -1k, 10k forecast, 36k previous.
• US Government Payrolls Sep, 7k, -9k previous.
• US Unemployment Rate Sep, 4.2%, 4.4% forecast, 4.4% previous.
• US Average Earnings MM Sep, 0.5%, 0.3% forecast, 0.1% previous.
• US Average Earnings YY Sep, 2.9%, 2.5% forecast, 2.5% previous.
• US Average Workweek Hrs Sep, 34.4, 34.4 forecast, 34.4 previous.
• US Labor Force Partic Sep, 63.1%, 62.9% previous.
• US U6 Underemployment Sep, 8.3%, 8.6% previous.
• US Wholesale Invt(y), R MM Aug, 0.9%, 1.0% forecast, 1.0% previous.
• US Wholesale Sales MM Aug, 1.7%, 0.0% forecast, -0.1% previous.
• CA Employment Change Sep, 10.0k, 14.5k forecast, 22.2k previous.
• CA Unemployment Rate Sep, 6.2%, 6.3% forecast, 6.2% previous.
• CA Ivey PMI Sep, 68.6, 56.8 previous.
• CA Ivey PMI SA Sep, 59.6, 56.3 previous.
• Trump eviscerates health insurance birth control mandate.
• US Treasury outlines sweeping reform of capital markets.
Looking Ahead - Economic Data (GMT)
• N/A China FX Reserves (Monthly) Sep, 3.100T forecast, 3.092T prev (Oct 7)
• 01:45 ChinaCaixin Services PMI Sep, 52.7 previous (Oct 9)
Looking Ahead - Events, Other Releases (GMT)
• 15:45 Fed’s Boston President Eric Rosengren speaks at conf. in Montreal (Oct 7)
• 16:00 ECB’s Lautenschlager gives a speech at Hohenheim University in Stuttgart (Oct 9)
Currency Summaries
EUR/USD is likely to find support at 1.1665 levels and currently trading at 1.1731 levels. The pair has made session high at 1.1737 and hit lows at 1.1666 levels. Euro recovered most of the earlier lost ground against the dollar in the US session on Friday as U.S. dollar tumbled on a report that North Korea is preparing to test a long-range missile, overturning earlier gains after the government’s jobs report for September showed an unexpected rise in wages. RIA news agency cited a Russian lawmaker's making comments on the missile test, which North Korea believes can reach the U.S. West Coast. The dollar earlier rose to seven-week high against the euro as wage data from the September labor market report was seen as a sign of potentially improving inflation. Average hourly earnings increased 12 cents, or 0.5 percent, in September after rising 0.2 percent in August. The gains came as nonfarm payrolls fell by 33,000 jobs last month after Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring. The euro fell to $1.1670, the lowest level since Aug. 17, before rising back to $1.1726.Tepid inflation has been a bugbear for the Federal Reserve, which has puzzled over why price pressures remain low even as the job market improves. The wage improvement boosted already high expectations that the U.S. central bank will raise rates at its December meeting, and that further hikes in 2018 are likely.
GBP/USD is supported in the range of 1.3009 levels and currently trading at 1.3064 levels. It reached session high at 1.3075 and dropped to session low at 1.3025 levels. Sterling declined to four-week lows against the dollar on Friday, amid growing uncertainty over Prime Minister Theresa May's control of the leadership and strong U.S labour market data that boosted the dollar. Sterling was on track for its worst week in a year against the dollar and on a trade-weighted basis, after a more than 2 percent fall. Prime Minister May said on Friday she would stay on as leader to provide stability after a former chairman of her Conservative Party said he had the support of 30 lawmakers who wanted her to quit. May’s assurances gave sterling a brief lift - it briefly topped $1.31 after her statement -but they were not enough to assuage worries over divisions in the Conservative government. Data last week showed speculators had turned positive on sterling for the first time in almost two years in the week up to last Tuesday. The gains were driven by expectations the Bank of England would raise interest rates and optimism around Brexit negotiations. But numbers due later on Friday are likely to show a reversal of those long positions. The political uncertainty and worries over the health of Britain's economy have helped knock more than 3.5 percent off the pound's value over the past two weeks.
USD/CAD is supported at 1.2500 levels and is trading at 1.2535 levels. It has made session high at 1.2581 and lows at 1.2521 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday, recovering from a five-week low, after domestic data showed a pickup in wages and pointed to a tightening labor market. Canadian wage growth accelerated at its fastest pace in over a year in September, keeping alive the possibility that the Bank of Canada could hike interest rates for a third time by the end of the year. Average hourly wages for permanent employees rose 2.2 percent last month from a year ago, Statistics Canada said in its jobs report on Friday. The acceleration, which was the fastest annual pace since June 2016, suggested there may be a recovery in wage growth, which has been weak despite strong labor market gains over the past year and is being closely watched by the Bank of Canada. Chances of a rate hike in October edged up but remained below 20 percent after the data, the overnight index swaps market indicated. They had been nearly 40 percent before Governor Stephen Poloz signalled last week that a third hike was not imminent. The Canadian dollar was up 0.1 percent at C$1.2532 to the greenback or 79.64 U.S. cents. The currency's strongest level of the session was C$1.2524, while it touched its weakest since Aug. 31 at C$1.2600.
USD/JPY is supported around 112.34 levels and currently trading at 112.69 levels. It peaked to hit session high at 113.45 and made session lows at 112.30 levels. The U.S. dollar declined against the yen on Friday as concerns by a Russian report that North Korea is preparing to test a long-range missile stoked demand for safe-haven Japanese yen. Russian RIA news agency quoted a Russian lawmaker who had visited Pyongyang on Oct. 2-6 as saying the test was for a missile North Korea believes can reach the U.S. West Coast. Outside of North Korea, investors had little appetite for greenback following the mixed U.S. jobs data. U.S. nonfarm payrolls fell by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector. But the unemployment rate fell to 4.2 percent, the lowest since February 2001. The average hourly earnings, meanwhile, increased 12 cents in September after rising 0.2 percent in August. Following the U.S. jobs data, the rate futures market has priced in a more than 90 percent chance of a Fed tightening in December, according to CME's FedWatch. Market participants have recently been focusing less and less on the headline payrolls number, and instead have turned their attention to wage growth. The greenback jumped as high as 113.43 yen , the highest level since July 14, before dropping to 112.67.
Equities Recap
European shares rose for the fourth consecutive week on Friday as confidence over the region's economic recovery outweighed worries over the Catalonia crisis, whose impact remained confined to Spanish equities.
UK's benchmark FTSE 100 closed up by 0.19 percent, the pan-European FTSEurofirst 300 ended the day down by 0.40 percent, Germany's Dax ended down by 0.10percent, France’s CAC finished the day down by 0.38 percent.
U.S. stocks eased on Friday after their recent record streak of gains as the first monthly decline in U.S. nonfarm jobs in seven years dampened sentiment and pharmacy shares declined.
Dow Jones closed down by 0. 22 percent, S&P 500 ended down 0. 0.10 percent, Nasdaq finished the day up by 0.20 percent.
Treasuries Recap
U.S. Treasury yields advanced on Friday after data showed the world's largest economy lost jobs last month due to the impact of Hurricanes Harvey and Irma, but details of the report on the unemployment rate and wage growth suggested an improving labor market.
In late trading, the 10-year U.S. Treasury note yield was at 2.369 percent, up from Thursday's 2.35 percent. But the yield came from its highest level since May 11, above 2.4 percent.
The 30-year yield was at 2.904 percent, of its strongest level since August 1 of 2.933 percent.
U.S. two-year note yields came off a nine-year high and was last at 1.512 percent.
Commodities Recap
Gold bounced up from a two-month low on Friday, on concerns stoked by a Russian report that North Korea is preparing to test a long-range missile and on support from the U.S. dollar's shift into negative territory.
Spot gold rose 0.4 percent at $1,273.06 an ounce by 2:40 p.m. EDT (1840 GMT). U.S. December gold futures settled up 0.1 percent at $1,274.90.
Oil prices fell more than 2 percent and ended Brent's longest multi-week rally in 16 months following profit taking and the return of oversupply concerns.
Brent settled at $55.62 per barrel, down $1.38 on the day, while U.S. crude fell $1.50 to settle at $49.29.
