Today is another NFP Friday so price action was subdued for the most part as traders hunkered down ahead of the U.S. NFP report.
The session wasn’t a complete snooze fest, though, since the Swissy and the yen were both broadly lower despite the risk-off vibes in Europe.
The Aussie, meanwhile, was nudged broadly higher, probably because of rising gold prices and/or short-covering after getting a beating this week.
Other than those, the Greenback is also worth mentioning since it was mixed but a net loser ahead of the NFP report.
- German factory orders m/m: 2.0% vs. 0.8% expected, -0.9% previous
- German PPI m/m: 0.3% vs. 0.2% expected, same as previous
- French budget balance: -€97.3B vs. -€82.8B previous
- French trade balance: -€5.63B vs. -€4.85B expected, -€3.49B previous
- Swiss foreign currency reserves: CHF 740B vs. CHF 731B previous
- Swiss CPI m/m: 0.1% vs. 0.2% expected, 0.0% previous
- Halifax U.K. HPI m/m: -1.4% vs. 0.2% expected, -0.2% previous
- Italian retail sales m/m: 0.7% vs. 0.2% expected, -0.1% previous
- U.S. NFP report coming up
- Canada’s jobs report also on tap
Today is another NFP Friday! And as usual, both directional movement and volatility got sapped on most pairs as traders kept their heads down and sat on their hands ahead of the U.S. NFP report.
By the way, if you’re planning to trade the NFP report, then you may wanna check out Forex Gump’s Event Preview for the upcoming NFP report.
And while you’re at it, you may also wanna check out Forex Gump’s Event Preview for Canada’s jobs report since that will be released simultaneously with the NFP report.
Italy’s Salvini speaks
Italian Deputy Prime Minister (and leader of the euroskeptic League) Matteo Salvini got some press time earlier.
And he unleashed a verbal lashing against European Commission President Jean-Claude Juncker and Economic Affairs Commissioner Pierre Moscovici, saying that:
“The EU said yes to (past) budgets that impoverished Italy and made its situation precarious.”
“So I don’t get up in the morning thinking about the judgement that people like Juncker and Moscovici, who have ruined Europe and Italy, have of the government and of Italy.”
“They can say what they want. We’ll keep going straight on with peace of mind.”
According to two unnamed “diplomatic sources” that were cited in a Reuters report, the E.U. supposedly believes that a divorce deal with the U.K. is “very close“.
There were no further details, but the report did cause the pound to jump higher across the board.
The report was released just before the morning London session rolled around, though. And during the session itself, the pound closed out the session mixed but a net winner.
Another downbeat day in Europe
Risk aversion continued to plague Europe during the morning London session, sending the major European equity indices broadly lower for another day.
And like yesterday, market analysts are still blaming the elevated levels of U.S. bond yields for the risk-off vibes since higher U.S. bond yields signal higher inflation expectations and more rate hikes, which would mean tighter credit conditions.
However, it’s also possible that we’re just seeing the usual skittishness ahead of the NFP report.
- The pan-European FTSEurofirst 300 was down by 0.45% to 1,484.06
- Germany’s DAX was down by 0.64% to 12,165.17
- The blue-chip Euro Stoxx 50 was down by 0.39% to 3,362.55
U.S. equity futures were also in the red, which implies that risk aversion may persist into the upcoming U.S. session. That may change, though, since the U.S. NFP report is coming up.
- S&P 500 futures were up by 0.04% to 2,907.00
- Nasdaq futures were up by 0.12% to 7,505.00
Global bond yields rise
Global bond yields were on the rise during the session. And market analysts attributed that to the steady rise in U.S. bond yields. And the rise in U.S. bond yields, in turn, was attributed to speculation that the upcoming NFP report will print a strong reading.
- German 10-year bond yield up by 2.23% to 0.549%
- French 10-year bond yield up by 0.54% to 0.888%
- Italian 10-year bond yield up by 2.46% to 3.414%
- U.K. 10-year bond yield up by 0.66% to 1.680%
- U.S. 10-year bond yield up by 0.29% to 3.204%
- Canadian 10-year bond yield up by 0.63% to 2.575%
Major Market Mover(s):
Despite the risk-off vibes, the Aussie was the best-performing currency of the morning London session and is also arguably the only real mover of the session.
There were no apparent catalysts for the Aussie’s rise, but gold was climbing higher, which may have given AUD pairs a boost. Short-covering is also a possibility since the Aussie is one of the bigger losers this week.
AUD/USD was up by 13 pips (+0.18%) to 0.7073, AUD/JPY was up by 17 pips (+0.21%) to 80.56, AUD/CHF was up by 17 pips (+0.24%) to 0.7028
The Swissy was the biggest loser of the morning London session, which is rather strange since risk aversion was the more dominant sentiment in Europe. Is the SNB meddling again?
USD/CHF was up by 6 pips (+0.06%) to 0.9935, NZD/CHF was up by 9 pips (+0.15%) to 0.6428, GBP/CHF was up by 11 pips (+0.08%) to 1.2968
The yen barely won out against the Swissy and was the second weakest currency of the session, likely because of rising bond yields since risk aversion prevailed in Europe.
USD/JPY was up by 4 pips (+0.03%) to 113.89, NZD/JPY was up by 10 pips (+0.13%) to 73.68, GBP/JPY was up by 8 pips (+0.06%) to 148.66
Watch Out For:
- 12:30 pm GMT: U.S. non-farm payrolls (+185K expected vs. +201K previous), jobless rate (3.8% expected vs. 3.9% previous), and average hourly earnings (0.3% expected vs. 0.4% previous); read Forex Gump’s preview
- 12:30 pm GMT: U.S. trade balance (-$53.6B expected vs. -$50.1B previous)
- 12:30 pm GMT: Canada’s net employment change (+25.0K expected vs. -51.6K previous), jobless rate (5.9% expected vs. 6.0% previous), and labor force participation rate (steady at 65.3% expected); read Forex Gump’s preview
- 12:30 pm GMT: Canada’s trade balance (-$0.5B expected vs. -$0.1B previous)
- 4:40 pm GMT: Atlanta Fed President Raphael Bostic has a speech
- 7:00 pm GMT: U.S. consumer credit ($15.0B expected vs. $16.6B previous)