Market Roundup
• US job growth slows (NFP 156k v forecast 178k, 204k previous), wages rebound strongly (AHE +0.4).
• US Nov Trade deficit widens -45.2B v -42.5B forecast, -42.4B previous.
• US Nov Factory orders -2.4% v -2.2% forecast, 2.8% previous; ex-transport m/m 0.1% v 0.8% previous.
• Fed's Evans: he's optimistic on growth, wary of downside risks.
• Fed’s Lacker: oil price rises may cause uptick in inflation to quicken, tightening labor markets to add to wage pressures in 2017.
• Fed’s Kaplan: making progress on Fed mandates, main debate over pace of hikes (Bloomberg).
• Atlanta Fed’s GDPNow sees US Q4 GDP steady at 2.9% same as Jan 3.
• NY Fed’s Nowcast sees US economy growing 1.94% in Q1 ’17 v 1.7% on Dec 30.
• NY Fed’s Nowcast sees US economy growing 1.89% in Q4 ’16 v 1.77% on Dec 30.
• German deputy FinMin Spahn urges "prudent start to exit" from ECB stimulus.
• Euro Zone bond yields set for biggest weekly rise in weeks on inflation jitters, French, Dutch yields poised for biggest rise in 2-months.
• Trump says US funds spent on border wall would be repaid by Mexico.
• Mexico central bank confirms 2nd Forex intervention, sold dollars in Asian trade (Friday)
• Gold slips from 1-months high after US data on track to end week +2%; palladium soars to 5-wk high
Looking Ahead - Economic Data (GMT)
• --:-- China FDI (YTD)* Dec 3.90%
• 22:30 Australia AIG Construction Index Dec 46.60
• 00:30 Australia Building Approvals* Nov -12.60%
• 00:30 Australia Private House Approvals Nov -3.40%
• 00:30 Australia ANZ Internet Job Ads Dec 1.70%
Looking Ahead - Events, Other Releases (GMT)
• No significant events
Currency Summaries
EUR/USD is likely to find support at 1.0448 levels and currently trading at 1.0528 levels. The pair has made session high at 1.0584 and hit lows at 1.0523 levels. Euro declined against the dollar on Friday as the dollar was lifted by U.S. non-farm payrolls data that showed a slowing in hiring last month but an increase in wages. The dollar gained broadly against major currencies after the U.S. non-farm payrolls report showed a slowing in hiring in December but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve this year. The dollar hit a session high against the yen of 116.74 yen, while the euro after hitting a one-week high immediately after the report's release, fell to a session low of $1.0536.October and November figures were revised to show 19,000 more jobs added than previously reported. The U.S. economy created 2.16 million jobs in 2016 with the year-on-year increase in average hourly earnings rising to 2.9 percent. The dollar index, which measures the greenback against six major currencies, was at up 0.4 percent at 101.92 after having set a 14-year high of 103.820 three days ago.
GBP/USD is supported in the range of 1.2200 levels and currently trading at 1.2268 levels. It reached session high at 1.2388 and dropped to session low at 1.2260 levels. Sterling declined against the dollar on Friday as the dollar strengthened after greenback was boosted after US data showed a rebound in wages, despite U.S. employment increasing less than expected in December, pointed to sustained labour market momentum. Non-farm payroll data showed that the United States added 156,000 jobs in December, less than expected, but a rebound in wages pointed to sustained labour market momentum, stronger growth and further interest rate rises from the Fed. Traders have been closely following U.S. economic reports to try to figure out how many times the Federal Reserve could raise interest rates this year.Many believe the U.S. central bank will be forced to be more aggressive due to U.S. President-elect Donald Trump's anticipated policies of heavy spending and lower taxes, potentially dampening the allure of high-yielding emerging markets. The Fed has indicated that it will press ahead with further rate hikes this year after its second in a decade last month.
USD/CAD is supported at 1.3151 levels and is trading at 1.3248 levels. It has made session high at 1.3254 and lows at 1.3176 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday following surprisingly domestic employment and trade data. Canada’s economy unexpectedly added 53,700 jobs in December, all of them full-time positions, and the unemployment rate edged higher, according to government data. It also posted a trade surplus of C$526 million, its first since September 2014, as exports jumped and imports posted a modest gain. Economists, on average, were expecting declines for both data. The U.S. dollar also strengthened following U.S. jobs data that showed slower job growth, but an increase in wages, setting the economy up for further interest rate increases from the Federal Reserve. The Canadian dollar was trading at C$1.3208 to the greenback, or 75.71 U.S. cents, stronger than the Bank of Canada's official close of C$1.3242, or 75.52 U.S. cents.
AUD/USD is supported around 0.7253 levels and currently trading at 0.7300 levels. It hit session high at 0.7333 and made session lows at 0.7287 levels. The Australian dollar declined against US dollar on Friday as the greenback gained ground against a basket of currencies after data showed US non-farm payrolls increased by 156,000 jobs in December, compared with market forecasts of a gain of 178,000, the Labor Department said. But investors focused more on average hourly earnings, which increased 10 cents or 0.4 percent. That pushed the year-on-year rise in average hourly earnings to 2.9 percent, the biggest increase since June 2009, from 2.5 percent in November. The Australian dollar was last trading at $0.7297, having rallied 0.7 percent overnight when it touched a three-week high of $0.7356. U.S. dollar has risen sharply since Trump won the U.S. election in November and while Friday's additional gains suggested the rally is not yet over, some investors have grown cautious.
Equities Recap
European stocks rallied from lows on Friday after a stronger than anticipated increase in earnings in a flagship U.S. jobs report made up for a weaker-than-forecast payrolls figure.
UK's benchmark FTSE 100 closed up 0.1 percent, the pan-European FTSEurofirst 300 ended the day down by 0.10 percent, Germany's Dax ended up by 0.1 percent, France’s CAC finished the day up by 0.2 percent.
The Dow came within one point of 20,000 for the first time ever on Friday, fueled by a rise in Apple and extending a two-month rally fueled by optimism that President-elect Donald Trump's policies will bolster the economy.
Dow Jones closed up by 0.34 percent, S&P 500 ended up 0.36 percent, Nasdaq finished the day up by 0.60 percent.
Treasuries Recap
U.S. Treasury debt yields rallied from multiweek lows on Friday after data showed a rebound in U.S. wages last month despite a smaller-than-expected jobs gain, which could drive the Federal Reserve to consider raising interest rates as early as the first quarter.
In late trading, the U.S. 10-year note was down 13/32 in price, yielding 2.419 percent, compared with 2.368 percent late Thursday.
U.S. 30-year bond prices fell 25/32, yielding 3.002 percent, from Thursday's 2.963 percent.
U.S. two-year note yields were at 1.213 percent from 1.178 percent on Thursday.
The belly of the curve - U.S. five-year and seven-year notes - also rose from four-week lows, with yields at 1.923 percent and 2.228 percent.
Commodities Recap
Gold prices slipped on Friday from the previous day's one-month high as the dollar strengthened on a solid U.S. jobs report, while palladium was on track for its largest weekly gain since March on record high U.S. car sales.
Spot gold was down 0.7 percent at $1,171.70 an ounce by 2:51 p.m. EST (1951 GMT), but up 1.75 percent on the week, its biggest weekly rise in two months.
U.S. gold futures settled down $7.9, or 0.67 percent, at $1,173.4 per ounce.
Oil rose slightly on Friday on futures buying, ending the week higher, but gains were limited by a strong U.S. dollar and lingering doubts about whether OPEC producers would stick to a deal to cut output.
Brent crude futures settled 21 cents higher at $57.10 per barrel, after trading in a range of $56.28 to $57.47. The contract posted gains for the second week in a row.
U.S. West Texas Intermediate (WTI) crude futures ended the session up 23 cents at $53.99 a barrel, after swinging between $53.32 and $54.32. WTI notched its third straight weekly gain.
