Market Roundup
• U.S. nonfarm payrolls miss expectations: +151k vs forecast 180k.
• Traders trim bets on Fed rate hike as U.S. job gains slow.
• Jobs report gives ammo to Fed skeptics on September rate hike.
• Fed's Lacker: Aug payroll report suggests U.S. labor market still tightening.
• Goldman Sachs ups probability of Fed rate hike in September to 55%-research note.
• Goldman's Hatzius: August payrolls not great but 'just enough'-CNBC
• U.S. trade gap -39.47 billion dollar vs forecast -42.7 billion and June's -44.66 billion.
• U.S. July factory orders +1.9% vs forecast +2.0%, June -1.8%.
• Brazil industrial output 0.1% m/m in July vs forecast -0.2%.
• Canada trade deficit shrinks to CAD 2.49 billion in July vs forecast 3.25 billion.
Looking Ahead - Economic Data (GMT)
• 23:30 Australia AIG Services Index Aug 53.9 -previous
• 1:30 Australia Business Inventories* Q2 forecast 0.40% 0.40% - previous
• 1:30 Australia Gross Company Profits Q2 forecast 2.00% -4.70% - previous
• 1:30 Australia Company Profits Pre-Tax Q2 -15.10% - previous
• 1:30 Australia ANZ Newspaper Job Ads Aug -12.60% - previous
• 1:30 Australia ANZ Internet Job Ads Aug -0.70% - previous
• 1:45 China Caixin Services PMI Aug 51.7 - previous
Currency Summaries
EUR/USD is likely to find support at 1.1124 levels and currently trading at 1.1155 levels. The pair has made session high at 1.1252 and hit lows at 1.1148 levels. Euro rose sharply against the greenback initially in US session as buyers stepped in following U.S. jobs report which came in below expectations, but reversed course as investors viewed that Federal Reserve will still likely to raise interest rates in the coming months, despite disappointing jobs data in August. Nonfarm payrolls rose by 151,000 jobs last month, the Labor Department said on Friday, below the 180,000 jobs that economists had expected. Hawkish statements from Fed Chair Janet Yellen and Vice Chair Stanley Fischer last week increased expectations before the jobs data that the U.S. central bank is closer to raising rates. Most investors see a rate increase at the Fed's policy meeting later this month as a long shot, with the December meeting seen as the most likely time for a hike this year.
GBP/USD is supported in the range of 1.3223 currently trading at 1.3292 levels. It reached session high at 1.3351 and hit low at 1.3290 levels. British pound rallied against the dollar on Friday as the slightly weak monthly U.S. employment report led investors to bets in favour of the pound, but pound pared gains after the dollar turned positive. Despite the soft report, Richmond Federal Reserve Bank President Jeffrey Lacker on Friday said the U.S. economy appears strong enough to warrant significantly higher interest rates. Lacker argued that a range of economic analysis suggests the Fed's benchmark overnight interest rate is too low. Sterling rose to $1.3351, its highest level since Aug. 3 before declining to trade at 1.3292 level in the late US session. Sterling has performed reasonably well in the past few weeks, holding above a 30-year low of $1.2798 struck on July 8, helped by better-than-expected data that has taken the edge off concerns about a sharp decline in economic activity following British voters' decision in a June 23 referendum to back leaving the European Union.
USD/CAD is supported at 1.2923 levels and is trading at 1.2985 levels. It has made session high at 1.3097 and lows at 1.2980 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as domestic data showed a jump in exports and oil rose, while a slowdown in U.S. employment growth weighed on the greenback. Canada’s trade deficit in July unexpectedly shrank to C$2.49 billion from a record C$3.97 billion in June as exports jumped by 3.4 percent and imports stagnated, Statistics Canada data indicated. The Bank of Canada has been counting on an uptick in non-energy exports for the economy to meet its growth projections. However, non-energy exports have been hampered this year by weak U.S. business investment, while a weaker Canadian dollar has not helped exports as much as expected. The U.S. dollar dipped against a basket of major currencies as U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage growth moderated. The data could effectively rule out a rate increase from the Federal Reserve this month.
AUD/USD is supported around 0.7500 levels and currently trading at 0.7569 levels. It hit session high at 0.7615 and made session lows at 0.7540 levels. The Australian dollar inched higher against U.S. dollar on Friday after a surprisingly weak jobs report prompted doubts about the U.S. economy and its ability to sustain a near-term interest rate hike. Traders significantly cut bets that the Federal Reserve will raise rates at its meetings later in the month. U.S. dollar took a knock after report showed U.S. employers added 151,000 jobs in August, missing the 180,000 mark expected by economists. That took a Fed rate hike in September off the table, but kept the door open for an increase this year at the U.S. central bank's meeting in November or December. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.28 percent to 95.904, after earlier falling to 95.189, the lowest level since last Friday.
Equities Recap
European shares rose on Friday, with a leading regional equity index reaching its highest level since late May, as weaker-than-expected U.S jobs data led investors to pare back bets on an imminent U.S. interest rate hike.
UK's benchmark FTSE 100 down up 2.6 percent, the pan-European FTSEurofirst 300 ended the day up by 2.17 percent, Germany's Dax ended up by 1.4, France’s CAC finished the day up by 2.4 percent.
U.S. stocks advanced on Friday as a weaker-than-expected payrolls report tamped down expectations for a September rate hike from the U.S. Federal Reserve, although hawkish comments from another Fed official kept expectations for one this year intact.
Dow Jones closed up by 0.39 percent, S&P 500 ended up by 0.42 percent, Nasdaq finished the day up by 0.43 percent.
Treasuries Recap
U.S. Treasury yields on longer-dated maturities rose on Friday, with shorter-dated yields flat, after a weaker-than-expected U.S. non-farm payrolls report that suggested the Federal Reserve was unlikely to raise U.S. short-term interest rates this month.
Two-year notes were last little changed in price to yield 0.797 percent. The two-year yield fell to 0.746 percent after the data, the lowest since Aug. 23.
Ten-year Treasury notes fell 10/32 in price to yield 1.604 percent. After the data, yields on the 10-year note fell to 1.543 percent, the lowest since Aug. 26.
The 30-year Treasury bond rose to a one-week high of 2.29 percent during the day. It was last down 1-2/32 in price to yield 2.278 percent.
Commodities Recap
Gold rose more than 1 percent on Friday after U.S. jobs growth came in below expectations, dampening the likelihood of an interest rate hike from the Federal Reserve this month, but bullion pared gains after the dollar turned positive.
Spot gold jumped to a session high of $1,328.73 an ounce after the non-farm payrolls data, and was up 0.7 percent at $1,322.36 by 2:20 p.m. EDT (1820 GMT). It was on track to close the week up 0.15 percent. U.S. gold futures settled up 0.7 percent at $1,326.70.
Oil settled up nearly 3 percent on Friday after a weak U.S. jobs report hurt the dollar and boosted commodities, but crude prices still ended the week sharply lower on concerns about oversupply.
Brent crude futures settled up $1.38, or 3 percent, at $46.83 a barrel. For the week, Brent was down 6 percent, its biggest drop in five weeks.
U.S. West Texas Intermediate futures rose $1.28, also 3 percent, to settle at $44.44. WTI fell nearly 7 percent on the week, its largest decline in eight weeks.
