Market Roundup
• US July NFP rises by 255k vs forecast 180k, PP 217k vs 170k forecast.
• US avg workweek earnings rise as well, labor participation rate 62.8% vs 62.7% previous.
• Canada Employment -31.2k vs +10k forecast, participation rate drops to 65.4% from 65.5%.
• Wall Street hits intraday record high on payrolls report lift.
• China central bank says it will fine-tune policy as needed; warns on reserve cut.
• China July data to show broadly steady growth, further slowing in investment.
• BoE officials flag lower rates as surveys show trouble ahead, Carney, Broadbent say new stimulus can't fully offset slowdown.
• BoE’s Broadbent: would back further cut in rates unless growth picks up, more bond purchases or other measures can't be ruled out.
• Atlanta Fed’s GDPNow: US economy seen growing 3.87% in Q3 vs 3.7%on Aug 4.
• NY Fed’s Nowcast sees Q3 GDP at 2.6% vs 2.5% previous.
Looking Ahead - Economic Data (GMT)
• --:-- China FX Reserves (Monthly)* Jul forecast 3.20 trillion, 3.21 trillion -previous
• 23:50 Japan Bank Lending YY Jul 2.00%- previous
• 23:50 Japan Current Account NSA JPY Jun forecast 1056.7b, 1809.1b- previous
• --:-- Japan Economy Watchers Poll* Jul 41.20- previous
• --:-- China Exports YY* Jul forecast -3%, -4.80%- previous
• --:-- China Imports YY* Jul forecast -7%, -8.40%- previous
• --:-- China Trade Balance USD* Jul forecast 47.60b, 48.11b- previous
Looking Ahead - Events, Other Releases (GMT)
• 23:50 Japan BoJ releases the summary of opinions from its July policy meeting
Currency Summaries
EUR/USD is likely to find support at 1.1036 levels and currently trading at 1.1090 levels. The pair has made session high at 1.1104 and hit lows at 1.1042 levels. Euro declined sharply against the greenback as sellers stepped in following the U.S. jobs report which came better than expected, bolstering expectations of faster economic growth and raising the probability of a Federal Reserve interest rate increase this year. Nonfarm payrolls rose by 255,000 jobs after an upwardly revised 292,000 surge in June, with hiring broadly based across the sectors of the economy, the Labor Department said on Friday.The unemployment rate was unchanged at 4.9 percent as more people entered the labor market. Highlighting job market strength, average hourly earnings increased a healthy eight cents and workers put in more hours. In addition, 18,000 more jobs were created in May and June than previously reported. In early morning trading, the dollar index rose 0.5 percent to 96.223, recovering from last week's poor showing when it fell 2 percent for its worst weekly performance since April. The euro, meanwhile, slid to a one-week low against the dollar and last traded at $1.1070, down 0.5 percent.
GBP/USD is supported in the range of 1.3000 currently trading at 1.3077 levels. It reached session high at 1.3097 and hit low at 1.3018 levels. British pound slumped against the dollar on Friday as the monthly U.S. employment report led investors to bets in favour of the dollar. The pound gained 0.15 percent to 84.76 pence per euro and had looked to be recovering after the Bank of England announced a package of new stimulus measures for Britain's slowing economy on Thursday, driving sterling to its biggest daily losses in a month. But an hour after the U.S. numbers, it was trading half a percent lower on the day at $1.3037, having touched a three-week low of $1.3021The Bank of England's cuts on Thursday in its growth forecasts for next year and its hints of more easing to come underline the central case bank analysts have made for the pound to weaken since June's vote to leave the European Union. But with bets against sterling already at their highest on record, weakening the currency has proved difficult for speculative investors over the past month. It remains more than 2 cents above lows hit in early July.
USD/CAD is supported at 1.3100 levels and is trading at 1.3161 levels. It has made session high at 1.3200 and lows at 1.3150 levels. The Canadian dollar weakened against its U.S. counterpart on Friday as stronger than expected U.S. jobs data and a slump in domestic jobs and a record-wide Canadian trade deficit weighted on the loonie. Canada unexpectedly shed jobs last month, sending the unemployment rate higher even as fewer people were looking for work, and a lackluster gain in exports in June raised questions about whether the central bank's outlook was too sunny. The nation lost 31,200 jobs in July, Statistics Canada said on Friday, and frustrating economists' expectations for a gain of 10,000. In addition, Canada's trade gap unexpectedly widened to a record deficit in June as imports of motor vehicles and parts jumped while the increase in exports was lackluster. Lower oil prices added to pressure on the commodity-linked Canadian dollar as a glut of crude and refined products weighed on markets and investors eyed a possible stutter in China's imports. U.S. crude prices were down 0.50 percent to $41.72 a barrel.
AUD/USD is supported around 0.7565 levels and currently trading at 0.7622 levels. It hit session high at 0.7639 and made session lows at 0.7596 levels. The Australian dollar declined against U.S. dollar on Friday after a surprisingly strong US jobs report bolstered expectations of faster economic and its ability to sustain a near-term interest rate hike. Traders now see that the Federal Reserve will raise rates in September. Forecast-beating U.S. non-farm payrolls numbers, coming a day after the launch of a new Bank of England monetary easing package, sent U.S. Treasury yields higher. The Australian dollar declined to $0.7579, from $0.7640 early and was trading last at 0.7618. Resistance was found at $0.7668.It was on track to end the week 0.7 percent higher despite the Reserve Bank of Australia (RBA) lowering its policy rate to a record low 1.5 percent on Tuesday.
Equities Recap
The broad-based major European indices closed higher in Friday's trading session, as rising automotive stocks and banks help buoy the markets.
UK's benchmark FTSE 100 closed up 0.7 percent, the pan-European FTSEurofirst 300 ended the day up by 0.92 percent, Germany's DAX ended up by 1.3 percent, France’s CAC finished the day up by 1.4 percent.
U.S. stocks notched their best day in a month on Friday, with the S&P 500 and Nasdaq closing at record highs after a second straight month after robust labor market data increased optimism that economic growth is accelerating.
Dow Jones closed up by 1.02 percent, S&P 500 ended up by 0.84 percent, Nasdaq finished the day up by 1.04 percent.
Treasuries Recap
U.S. Treasury yields rose on Tuesday after Japan unveiled fiscal stimulus measures, dampening demand for U.S. government debt and sending long-dated U.S. yields to their highest levels in more than a week.
U.S. 30-year yields rose the most among U.S. Treasuries and hit 2.332 percent, their highest since July 21, before pulling back. U.S. 30-year yields were last at 2.300 percent, compared to 2.237 percent late Monday.
Benchmark 10-year yields hit a six-day high of 1.573 percent, but were last at 1.544 percent.
Commodities Recap
Gold fell as much as 1.7 percent on Friday, as the dollar rose after U.S. data showed employment increased more than expected in July, raising the probability of an interest rate hike from the Federal Reserve this year.
Spot gold fell to a one-week low of $1,336.46 an ounce and was down 1.7 percent at $1,338.25 by 2:48 p.m. EDT (1848 GMT).
The most-active U.S. gold futures for December delivery settled down 1.7 percent at $1,344.40 per ounce.
Crude oil prices ended little changed on Friday as short-covering returned in late trading, after some weakness earlier in the session as the U.S. dollar rose on robust U.S. jobs data.
The September front-month contract in WTI, or U.S. West Texas Intermediate (WTI) crude, settle down 13 cents, or 0.3 percent, at $41.80 per barrel, after falling nearly 2 percent earlier. $41.06. The October contract, which will become front-month from Aug 23, settled at $42.57.
Brent crude's front-month settled down just 2 cents at $44.27 per barrel. Earlier in the session, it fell to $43.51.
