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Today is another NFP Friday so volatility and directional movement were both in short supply as forex traders hunkered down ahead of the NFP report.

The session wasn’t a complete snooze fest, though, since the Kiwi was broadly higher, very likely because of the commodities rally and cautious risk-taking.

  • German factory orders m/m: 1.0% vs. 0.6% expected, 1.1% previous
  • Italian retail sales m/m: 0.6% vs. 0.1% expected, -0.1% previous
  • Euro Zone retail PMI: 51.0 vs. 53.2 previous
  • U.S. NFP report and Canada’s jobs report coming up
  • U.S. and Canadian trade data also coming up

Major Events/Reports

NFP Friday!

Today is another NFP Friday. And as usual, both directional movement and volatility got sapped on most pairs.

And also as usual, Forex Gump has a preview for the U.S. NFP report, so read his write-up here, if you’re interested.

By the way, Canada will be releasing its own jobs report simultaneously with the U.S. NFP report. And it just so happens that Forex Gump has a preview on that as well, so read it here, if you want.

BOE’s Broadbent speaks

BOE Deputy Governor Ben Broadbent was interviewed by the BBC earlier today. And in that interview, Broadbent revealed his hawkish feathers (even though he didn’t vote for a hike yesterday) when he said that

“The MPC said given the other assumptions in its forecast it thought probably there would need to be rate rises, and indeed more rate rises than those priced into the interest rate curve in future than the financial markets expect.

“I do think the time is likely to come when rates will go up generally.”

Moreover, Broadbent said that the U.K. can cope “a little bit” with a rate hike. Furthermore, Broadbent said that:

“One shouldn’t overdo this. If and when it happens there will be a lot of talk about the first rate rise since ‘x’. But it’s just a rate rise and we got perfectly used to rate rises of this size in the past.”

However, Broadbent did reiterate that the BOE is somewhat concerned that Brexit-related uncertainty is dampening the growth in business investment.

Oil sinks but other commodities supported

Commodities were raking in gains and climbing higher during today’s morning London session. However, it wasn’t a one way street since oil was going in the opposite direction.

Market analysts attributed the commodities rally, particularly the strong performance of base metals, on expectations of metal shortages and the surge in Chinese steel prices which also spurred demand for other metals.

It also probably helped that the Greenback was slightly weak during the session, with the U.S. dollar index down by 0.04% to 92.67 for the day when the session ended.

As for the slide in oil prices, market analysts blamed that on signs of higher U.S. and OPEC oil production and reports that OPEC’s oil exports reached a record high of 26.11 million barrels per day in July, thanks to higher output from OPEC members (such as Nigeria) that were exempt from OPEC’s extended oil cut deal.

Precious metals were in the green, even though there were signs of risk-taking.

  • Gold was up by 0.05% to $1,268.46 per troy ounce
  • Silver was up by 0.52% to $16.716 per troy ounce

Base metals were in the green with some (such as zinc) clearly outperforming.

  • Copper was up by 0.28% to $2.886 per pound
  • Zinc was up by 1.06% to $2,821.75 per dry metric ton

Oil benchmarks got sold off during the session, though.

  • U.S. WTI crude oil was down by 0.63% to $48.72 per barrel
  • Brent crude oil was down by 0.65% to $51.67 per barrel

Optimism in Europe ahead of NFP

Markets usually become skittish ahead of top-tier events like the NFP report. However, that does not appear to be the case during today’s morning London session since European equity indices were actually in the green, which implies risk-taking.

Market analysts noted that earning reports were mixed, but the basic materials sector outperformed, so the signs of risk-taking in Europe was likely due to the commodities rally.

  • The pan-European FTSEurofirst 300 was up by 0.15% to 1,491.76
  • Germany’s DAX was up by 0.17% to 12,175.50
  • The blue-chip Euro Stoxx 50 was up by 0.12% to 3,470.52

U.S. equity were also in positive territory ahead of the NFP report.

  • S&P 500 futures were up by 0.09% to 2,473.88
  • Nasdaq futures were up by 0.13% to 5,897.38

Major Market Mover(s):

NZD

The Kiwi was the only real mover since it climbed broadly higher in a mostly choppy session. As to what drove the Kiwi higher, there were no direct catalysts, but the risk-on vibes and commodities rally may have stoked demand for the higher-yielding comdoll.

NZD/USD was up by 16 pips (+0.22%) to 0.7449, NZD/CHF was up by 17 pips (+0.24%) to 0.7213, NZD/CAD was up by 35 pips (+0.38%) to 0.9372

Watch Out For:

  • 12:30 pm GMT: U.S. non-farm payrolls (180K expected, 222K previous), jobless rate (4.3% expected, 4.4% previous), average hourly earnings (0.3% expected vs. 0.2% previous)
  • 12:30 pm GMT: U.S. trade balance (-$43.9B expected, -$46.5B previous)
  • 12:30 pm GMT: Canada’s net employment change (+11.7K expected, +45.3K previous), jobless rate (steady at 6.5% expected), and labor force participation rate (steady at 65.9% expected)
  • 12:30 pm GMT: Canada’s trade balance (-$1.3B expected, -$1.1B previous)
  • 2:00 pm GMT: Ivey’s Canadian PMI (59.2 expected, 61.6 previous)