FX Trader, Loonieviews.net
Summary: The dollar is erasing Wednesday's gains with equities following suit as traders position themselves for Friday's US nonfarm payrolls update.
Markets are positioning for tomorrow’s US nonfarm payrolls report. Traders seemed to be re-evaluating yesterday’s equity and US dollar rally and reversed most if not all of yesterday’s move, perhaps believing that they moved too far ahead of themselves.
Friday’s NFP report is forecast to show a gain of 185,000 jobs, a tad shy of August’s 201,000 print. The shortfall is easily explained by blaming Hurricane Florence. Rumours of a blow-out print have surfaced based on a well-known economist extrapolating data from yesterday’s ISM employment component and opining that it "implies" a huge gain. He clarified his remark by noting huge monthly discrepancies and said he wouldn’t rush to change his forecast.
The US dollar retreated steadily across the G-10 currency spectrum since New York opened, but all the moves are modest. GBPUSD has rallied the most, and it is only up 0.27% (as of 14:00 GMT). The dollar wobbled slightly on news that US factory orders rose 2.3% in August, well above the 0.8% drop in July and handily beating the 2.1% forecast. The better than expected data came on the heels of a strong Initial Jobless Claims report (207,000 versus a forecasted 213,000).
The US dollar retreat is also due to the USDX failing to crack above resistance in the 95.80-90 area.
Wall Street is under pressure and has erased all of yesterday’s gains in early trading today. The surge in US Treasury yields, particularly the 10-year yield which touched 3.22 yesterday, put global equity indices under pressure, and US markets are following suit. Wall Street traders may be spooked by a Bloomberg article accusing China of hacking hardware for US companies such as Apple (AAPL:xnas) and Amazon (AMZN: xnas) Both companies denied the claim. A break below minor support at 95.24 would suggest further losses to 94.60.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
