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It was mostly quiet on the forex front, as volatility and directional movement both got sapped ahead of the U.S. NFP report.

It wasn’t a complete snooze fest, however, since the Aussie recovered from its earlier losses while the Kiwi closed lower against all its peers. As for the Greenback, it was mixed but mostly weaker during the morning London session.

  • German factory orders m/m: 3.6% vs. 0.7% expected, -0.7% previous
  • German factory orders y/y: 7.8% vs. 4.7% expected, 5.0% previous
  • French trade balance: -€4.51B vs. -€5.40B expected, -€5.97B previous
  • Swiss foreign currency reserves: CHF 724B vs. CHF 717B previous
  • Halifax U.K. HPI m/m: 0.8% vs. 0.0% expected, 1.1% previous
  • Italian retail sales m/m: -0.3% vs. 0.2% expected, -0.4% previous
  • U.S. NFP report coming up
  • Canada’s jobs report also coming up

Major Events/Reports

NFP Friday!

Today is another U.S. non-farm payrolls (NFP) Friday, which is likely why trading conditions were rather tight as forex traders hunkered down ahead of that top-tier event.

And also as usual, Forex Gump has an Event Preview for the September U.S. NFP report. So read up on that if you need to get up to speed on what happened last time and what’s expected this time.

And while you’re at it, you may also wanna read up on Forex Gump’s Event Preview for Canada’s September jobs report, since that top-tier event for the Loonie will be released simultaneously with the NFP report.

Commodities suffer

Commodities were having a tough time during the morning London session, so much so that they staged a broad-based retreat.

There was no clear reason for the broad-based commodities slide. However, the Greenback’s recent strength is a possibility since the U.S. dollar index was still up by 0.05% to 93.82 for the day when the session ended, even though the Greenback already gave back some of its gains during the session.

Precious metals were in the red, despite the risk-off vibes.

  • Gold was up by 0.11% to $1,271.74 per troy ounce
  • Silver was up by 0.05% to $16.630 per troy ounce

Base metals were also in negative territory.

  • Copper was down by 0.18% to $3.041 per pound
  • Zinc was down by 0.69% to $3,272.25 per dry metric ton

Oil benchmarks also suffered.

  • U.S. WTI crude oil was down by 0.91% to $50.33 per barrel
  • Brent crude oil was down by 0.46% to $56.74 per barrel

Risk aversion ahead of the NFP report

The major European equity indices were printing mostly losses again. And those few that were still showing gains were already off their highs.

As such, risk aversion appears to be the more dominant sentiment in Europe again. And as has been the case for most of the week, market analysts blamed the risk-off vibes in Europe on jitters related to the political tensions in Catalonia.

Of course, it’s also highly likely that we’re just seeing the usual skittishness ahead of a top-tier event like the NFP report.

  • The pan-European FTSEurofirst 300 was down by 0.16% to 1,534.03
  • Germany’s DAX was still up by 0.09% to 12,979.94 but off the day’s high at 12,994.00
  • The blue-chip Euro Stoxx 50 was down by 0.10% to 3,608.50

Major Market Mover(s):

NZD

The Kiwi closed the session lower against all its peers, which means that the Kiwi was the worst-performing currency of the morning London session.

There were no direct catalysts, but it’s likely that the risk-off vibes and commodities rout were weighing down on the higher-yielding Kiwi.

NZD/USD was down by 5 pips (-0.07%) to 0.7091, NZD/JPY was down by 10 pips (-0.13%) to 80.08, NZD/CHF was down by 4 pips (-0.06%) to 0.6947

AUD

The Aussie is considered as a higher-yielding comdoll as well, but it went in the opposite direction of the Kiwi and even ended up as the best-performing currency of the morning London session.

There’s no clear reason for the Aussie recovery, but it’s highly likely that Aussie bears who shorted earlier were taking some profits off the table ahead of the U.S. NFP report.

AUD/NZD was up by 23 pips (+0.22%) to 1.0966, AUD/CHF was up by 13 pips (+0.17%) to 0.762, AUD/JPY was up by 8 pips (+0.09%) to 87.82

USD

The Greenback had a mixed performance but was a net loser ahead of the NFP report since it closed higher against the Kiwi and the Swissy while ending up flat or lower against everything else, very likely because of preemptive unwinding ahead of the NFP report and after the Greenback’s rise from earlier.

EUR/USD was up by 11 pips (+0.10%) to 1.1706, GBP/USD was up by 7 pips (+0.05%) to 1.3078, AUD/USD was up by 12 pips (+0.15%) to 0.7777

Watch Out For:

  • 12:30 pm GMT: U.S. jobless rate (steady at 4.4% expected), non-farm payrolls (85K expected, 156K previous), and average hourly earnings (0.3% expected, 0.1% previous)
  • 12:30 pm GMT: Canada’s jobless rate (steady at 6.2% expected) and net employment change (+12K to +15K expected, +22.2K previous)
  • 2:00 pm GMT: Canada’s Ivey PMI (56.0 expected, 56.3 previous)
  • 4:15 pm GMT: New York Fed President William Dudley has a speech
  • 4:45 pm GMT: Dallas Fed President Robert Kaplan will speak
  • 5:50 pm GMT: St. Louis Fed President James Bullard is scheduled to speak
  • 7:00 pm GMT: U.S. consumer credit ($15.54B expected, $18.5B previous)