Today is another NFP Friday, so trading conditions were relatively tight. However, it’s worth mentioning that both the Greenback and the pound were able to find buyers while the Aussie dollar continued to slide even lower.
- U.K. services PMI: 55.6 vs. 53.3 expected, 53.6 previous
- U.S. NFP report coming up
- Canadian jobs report also coming up
Today is another U.S. non-farm payrolls (NFP) Friday! And as usual, both volatility and directional movement were in short supply for the most part, likely because forex traders were bracing themselves for the top-tier event.
U.K. services PMI jumps
Markit released the latest U.K. services PMI reading earlier today. And it was great because the reading for October came in at 55.6, jumping from the previous month’s 53.6 and contrary to expectations that the reading would ease to 53.3.
And did I mention that the reading for October is a six-month high?
According to commentary from Markit, the jump in the headline reading was due to “a rebound in new order growth from September’s 13-month low.”
Additional commentary also noted that “a range of factors underpinning new business gains, including improved domestic demand and successful new product launches.”
Moreover, “prices charged inflation continued to rise in October, reaching a six-month high,” which will likely mean higher CPI down the road.
But at the same time, “the overall rate of input cost inflation eased to its lowest in over a year,” which would mean higher profits for companies. Although that also means that inflationary pressure from higher input costs may ease later on.
Not everything was great, however, since “The latest increase in payroll numbers was the weakest since March.”
Modest risk-taking ahead of NFP report
Market usually become skittish ahead of a top-tier catalyst like the NFP report. However, that’s not the case it seems since the major European equity indices were mostly in the green.
And according to market analysts, the appetite for risk during the morning London session (and ahead of the NFP report) was spurred by positive earnings reports and the accommodative monetary policy of the major central banks.
- The pan-European FTSEurofirst 300 was up by 0.10% 1,555.47
- Germany’s DAX was up by 0.30% to 13,481.25
- The blue-chip Euro Stoxx 50 was up by 0.02% to 3,689.00
Even U.S. equity futures were in positive territory. That may change depending on how the NFP report turns out, though.
- S&P 500 futures were up by 0.09% to 2,579.00
- Nasdaq futures were up by 0.37% to 6,258.62
Another sign of the risk-on vibes is that precious metals, which are considered traditional safe-havens, were down.
- Gold was down by 0.23% to $1,275.19 per troy ounce
- Silver was down by 0.30% to $17.086 per troy ounce
Major Market Mover(s):
The pound was able to edge out the Greenback to emerge as the best-performing currency of the morning London session, thanks to the U.K.’s better-than-expected PMI reading. Although it’s also possible that some pound bears were covering their shorts after the pound tanked in the wake of the BOE’s dovish hike yesterday.
GBP/USD was up by 25 pips (+0.19%) to 1.3092, GBP/JPY was up by 35 pips (+0.24%) to 149.36, GBP/AUD was up by 58 pips (+0.35%) to 1.7072
The Greenback was the second strongest currency of the session. There were no direct catalysts for the Greenback’s strength, but preemptive positioning ahead of the NFP report is a likely reason.
USD/JPY was up by 6 pips (+0.05%) to 114.08, USD/CAD was up by 17 pips (+0.13%) to 1.2826, USD/CHF was up by 7 pips (+0.07%) to 0.9991
The Aussie extended its losses from the earlier Asian session, likely because traders are still disappointed with Australia’s retail sales report. Also, gold was down for the session, which likely weighed on the Aussie as well.
AUD/USD was down by 12 pips (-0.16%) to 0.7667, AUD/JPY was down by 9 pips (-0.11%) to 87.48, AUD/CHF was down by 9 pips (-0.12%) to 0.7659
Watch Out For:
- 12:30 pm GMT: U.S. non-farm payrolls (313.0K expected, -33.0K previous), jobless rate (steady at 4.2% expected), and average hourly earnings (0.2% expected, 0.5% previous)
- 12:30 pm GMT: Canadian net employment change (15.0K expected, 10.0K previous) and jobless rate (steady at 6.2% expected)
- 12:30 pm GMT: U.S. trade balance (-$43.2B expected, -$42.4B previous)
- 12:30 pm GMT: Canadian trade balance (-$3.00B expected, -$3.41B previous)
- 1:45 pm GMT: Markit’s final U.S. services PMI (55.7 expected, 55.9 previous)
- 2:00 pm GMT: U.S. factory orders (1.2% expected, same as previous)
- 2:00 pm GMT: ISM U.S. non-manufacturing PMI (58.5 expected, 59.8 previous)
- 4:15 pm GMT: Minneapolis Fed President Neel Kashkari will speak