FX Trader, Loonieviews.net
Summary: There was a lot of hype and anticipation ahead of the US employment report but the headline miss, which came along with a 48-year low in unemployment, was met by a muted reaction in the New York markets.
There was a lot of hype and anticipation ahead of the US employment report. It proved to be all sizzle but no steak. Nonfarm payrolls added 134,000 jobs in September, well below the consensus forecast of 185,000 and greatly disappointing to those expecting an upside surprise.
The surprise has been the FX market’s rather blasé reaction to the data.
The US dollar is marginally lower against the major G-10 currencies and unchanged against the Japanese yen since the New York open. However, since last week’s New York close, the greenback has made impressive gains against NZD, (2.22%,) AUD, (2.0%), and JPY (1.67%). EURUSD is down 0.65% while GBPUSD has risen 0.46%.
Next week, FX traders will refocus on US/China developments. There hasn’t been any progress in trade talks, and the anti-China rhetoric has ratcheted higher. There is a chance that USDCNY jumps in response to the recent US dollar strength and rhetoric when China reopens on Monday after a week’s holiday.
There were employment numbers that did surprise to the upside today, but they came from north of the US border. Canada added 63,300 jobs in September beating the forecast for a gain of 25,000 jobs. However, all the gains were part-time which took the bloom off the rose, leaving USDCAD unchanged as of 14:00 GMT.
Wall Street shrugged off the employment report, preferring to keep its eyes on Treasuries. Ten-year Treasury yields are firm at 3.214%, supported by the US unemployment rate touching a 48-year low.
EURUSD continues to bounce inside a 1.1450-1.1550 range since Wednesday. The downtrend that began September 27 following the break of support at 1.1650 comes into play at 1.1550, and while prices are below that level, the target is 1.1450. A topside break would lead to 1.1650, then 1.1730.
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.
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