Market Roundup
• US Jan Non-Farm Payrolls, 200k, 180k forecast, 148k previous, 160k revised.
• US Jan Private Payrolls, 196k, 180k forecast, 146k previous, 166k revised.
• US Jan Manufacturing Payrolls, 15k, 20k forecast, 25k previous, 21k revised.
• US Jan Unemployment Rate, 4.1%, 4.1% forecast, 4.1% previous.
• US Jan Average Earnings MM, 0.3%, 0.3% forecast, 0.3% previous, 0.4% revised.
• US Jan Average Earnings YY, 2.9%, 2.6% forecast, 2.5% previous, 2.7% revised.
• US Jan Average Workweek Hrs, 34.3, 34.5 forecast, 34.5 previous.
• US Jan ISM-New York Index, 767.9, 756.7 previous.
• US Dec Durable Goods, R MM, 2.8%, 2.9% previous.
• US Dec Factory Orders, 1.7%, 1.5% forecast, 1.3% previous, 1.7% revised.
• US Jan U Mich Sentiment Final, 95.7, 95.0 forecast, 94.4 previous.
• Trump escalates fight over Russia probe, approves release of secret memo.
• Europe's next crisis may test ECB limits, push rates lower: Coeure.
• ECB tapering of asset buying not "existential question" – Villeroy.
• German parties in coalition talks haggle over labour rights.
• Britain, EU schedule week of Brexit talks, eye future.
Looking Ahead - Economic Data (GMT)
• 4 Feb 22:30 Australia Jan AIG Services Index, 52.0 previous
• 5 Feb 00:30 Japan Jan Services PMI, 51.2 previous
• 5 Feb 01:45 China Jan Caixin Services PMI, 53.9 previous
Looking Ahead - Events, Other Releases (GMT)
• 2 Feb 20:30 Fed's John Williams speaks on the economy before the Financial Women of San Francisco - San Francisco
• 3 Feb 11:50 Riksbank Deputy Governor Cecilia Skingsley will participate in the Warwick Economics Summit - United Kingdom
• 5 Feb 12:00 OMFIF lunch discussion with Cecilia Skingsley, deputy governor of the Swedish central bank and co-chair of the World Economic Forum's working group, examining the prospects for central bank-issued digital currencies - London
Currency Summaries
EUR/USD is likely to find support at 1.2380 levels and currently trading at 1.2457 levels. The pair has made session high at 1.2490 and hit lows at 1.2407 levels. The euro declined against US dollar on Friday as strong national jobs data boosted greenback, but the greenback later pared some gains and investors were not convinced advances would last past the day. U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment. Nonfarm payrolls jumped by 200,000 jobs last month after rising 160,000 in December, the Labor Department said on Friday. The unemployment rate was unchanged at a 17-year low of 4.1 percent. Average hourly earnings rose 0.3 percent in January to $26.74, building on December's solid 0.4 percent gain. The dollar index, tracking the unit against a basket of major currencies, was up 0.58percent at 89.185 at 2:55 p.m. On the day, the greenback scored its best daily performance since Oct. 26. The euro fell 0.46 percent to $1.2451.
GBP/USD is supported in the range of 1.3968 levels and currently trading at 1.4118 levels. It reached session high at 1.4177 and dropped to session low at 1.4095 levels. Sterling extended losses against the dollar on Friday and fell to the day's lows after a U.S. report showing wages rose at their fastest clip since 2009 hit the currency which was already struggling thanks to weak data from Britain's construction sector.U.S. job growth surged in January and wages increased further, recording their largest annual gain in more than 8-1/2 years, bolstering expectations that inflation will push higher this year as the labor market hits full employment. Sterling slipped to the day's low of $1.4137 after the data, down around 0.75 percent on the day. It was also 0.4 percent weaker against the euro, at 87.975 pence. For the week, sterling was still up 1.5 percent against the dollar. Analysts say the currency is being supported by a repricing of Bank of England interest rate hike expectations several banks are now calling for a rise to come in May, and for another to come later in the year. On the data front, Britain’s construction sector came close to contracting for the first time since September last month as uncertainty linked to Brexit caused new orders to dry up, a survey showed on Friday.
USD/CAD is supported at 1.2300 levels and is trading at 1.2420 levels. It has made session high at 1.2435 and lows at 1.2256 levels. The Canadian dollar weakened to a one-week low against its U.S. counterpart on Friday after a pickup in U.S. wage growth boosted the greenback, while higher bond yields weighed on global stock markets. U.S. job growth surged in January and wages posted their largest annual gain in more than 8-1/2 years. The data helped push the U.S. dollar higher against a basket of major currencies as expectations rose that the Federal Reserve will raise interest rates as soon as March. Global stocks fell, pressured by prospects of higher inflation and climbing bond yields. Canada's commodity-linked currency tends to weaken when risk appetite fades. Crude prices fell on the surging dollar though adherence to output cuts by members of the Organization of the Petroleum Exporting Countries and rising global demand kept much of this year's rally in oil in place. The Canadian dollar was trading 1 percent lower at C$1.2429 to the greenback. The currency's strongest level of the session was C$1.2256, while it touched its weakest since Jan. 26 at C$1.2433. On Wednesday, the loonie touched its strongest level in four months at C$1.2250.
USD/JPY is supported around 109.40 levels and currently trading at 110.11 levels. It peaked to hit session high at 110.47 and made session lows at 110.11 levels. The U.S. dollar strengthened against the yen on Friday as dollar rose after U.S. jobs data showed a robust rise in jobs and wages and 10-year U.S. Treasury yields peaked.Non-farm payrolls rose by 200,000 jobs in January, the U.S. Labor Department said, beating expectation of 180,000 and their largest annual gain in more than 8-1/2 years. Average hourly earnings rose and boosted the year-on-year increase to 2.9 percent, the largest rise since June 2009. Economists polled had forecast nonfarm payrolls rising by 180,000 jobs last month and the unemployment rate unchanged at 4.1 percent. January's jobs gains were above the monthly average of 192,000 over the past three months.The robust employment report underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017. The dollar index, tracking the unit against a basket of major currencies, was up 0.58 percent at 89.185. Against the yen, the dollar reached its highest since Jan. 23, and was last up 0.79 percent at 110.25.
Equities Recap
European shares suffered their biggest weekly loss in more than a year on Friday as investors' appetite for risk dried up and disappointing results from Deutsche Bank dragged the heavyweight banking sector down.
The UK's benchmark FTSE 100 closed down by 0.6 percent, FTSEurofirst 300 ended the day down by 1.36percent, Germany's Dax ended down by 1.7 percent, and France’s CAC finished the down by 1.6 percent.
All three major U.S. stock indexes tumbled Friday with the Dow seeing its worst percentage drop since June 2016 as climbing bond yields prompted a selloff in equities.
Dow Jones closed down by 0.2.58 percent, S&P 500 ended down 2.15 percent, Nasdaq finished the day up by 1.96 percent.
Treasuries Recap
A strong U.S. payrolls report on Friday raised concerns the Federal Reserve might hasten to increase interest rates to stem inflation, compounding a bond market rout that pushed the yield on the benchmark 10-year Treasury note to a four-year high.
The yield on the benchmark 10-year Treasury reached a four-year peak at 2.852 percent. It was last at 2.841 percent, up 6.8 basis points on the day, marking five consecutive weeks of increases for the longest such stretch since late 2016.
The 2-year yield touched a more than nine-year high at 2.186 percent before ending lower to 2.145 percent on a bout of safe-haven buying. The S&P 500 and the Dow both scored their worst weeks in two years.
Commodities Recap
Gold prices declined on Friday as the U.S. dollar ticked up against the euro after U.S. jobs data showed a robust rise in jobs and wages and 10-year U.S. Treasury yields peaked.
Spot gold dropped 1 percent at $1,335.26 an ounce by 1:34 p.m. EST (1834 GMT), while U.S. gold futures for April delivery settled down $10.60, or 0.8 percent, at $1,337.30.
Oil prices fell on Friday as the dollar surged following strong U.S. jobs numbers, though compliance with output cuts by OPEC and rising global demand kept much of the early year oil rally in place.
U.S. West Texas Intermediate (WTI) crude settled down 35 cents to $65.45 a barrel, after earlier losing more than 1 percent. Brent lost $1.07, or 1.5 percent, to $68.58 a barrel.
The deep decline in Brent narrowed the gap between it and WTI to its narrowest since August; that wide gap has boosted U.S. exports in recent months.
