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Citi
European Open
USD saw some uptick in strength ahead of the much awaited NFP later today. US treasuries saw a slight uptick in yields. Fiscal developments for USD were seen overnight, with Democrat Chuck Schumer outlining that policymakers have reached an agreement to extend the debt ceiling to December. Headlines during the Asian session were focused around central banks, with PEN seeing a rate hike of 50bps to 1.50%, and INR seeing its policy rates maintained. Both were in line with expectations. However, INR also saw some announcements with regards tapering of its bond purchase program. PEN traded flat, while INR saw a slight dip. Lastly, we flag that CNY is back from their week long holiday today
Looking forward, NFP (13:30 BST) is at the top of the market’s minds. CAD will also see an employment report (13:30 BST). On the EM front, we see CPI prints for HUF (08:00 BST), trade balance (09:00 BST), and inflation prints for BRL (13:00 BST).
USD saw a slight uptick during Asian hours, with UST yields seeing upticks, most significantly in the front end. Equities held flat, both for Asian equities and S&P futures. Eyes are mostly on the NFP data to be released during the NY session today.
Looking to the near-term, markets now turn their attention to Friday’s NFP report at 13:30 BST, following an improvement in Initial jobless claims yesterday. CitiFX Wire’s Xhoel Veizi notes that Initial claims printed lower to 326k (348k expected; 364k prior revised higher). Continuing claims tick down to 2714k (2766k expected, 2811k prior revised higher). Market movements following the release were fairly minimal, with eyes on NFP.
JP Morgan
G10 FX
EUR: Fixed income continues to sell off, yields buoyed by the continued ascent of commodity prices, equities hanging in well this week given the whiff of small improvement in some of the global economic data which has provided a somewhat better environment for currencies on the week, long commodity currency plays versus a combination of dollars and euros has worked reasonably well. How fast and how high yields go I guess is the question and at what point does that spill over with negative connotations for risk, the market remains quite fragile emotionally on both sides of the price, so on that basis today’s payroll will be a good barometer.
Even though this week has played out somewhat more logically in the FX space, the threat of higher yields lingers large and that remains the focus for most. I continue to run long cad in particular, alongside some aud latterly, against a mix of dollars and euros for now. Longs in CE currencies continue to frustrate as the rates markets make hay, reduced the zloty on the move back yesterday but continue to dig in a bit in czk.
The euro consolidated yesterday, downward revisions again to our growth forecasts for the region on the back of disappointing German data continues to keep the focus on the downside, obviously somewhat dependent on today’s numbers. It has not been a very exciting move, I don’t feel that participation is high but maybe that’s just the way it continues as it feels such a low conviction trade, maybe a test and break of 1.15 may bring more people into the trade, to be honest I am similar in terms of participation. Back above 1.1610 and 1.1664 and we are back in familiar ranges.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.