NY Open: Pre-payrolls positioning

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.