It’s all about Non – Farm Payrolls and US wage growth figures today as markets seek direction in driving yields and equities – which are the two things heavily focused on right now. Markets will be capping off a volume-constrained week with another reading of the jobs report from the US, as the NFP action will kick off at 12:30 GMT.
Data released earlier in the week saw the private payrolls increase by a stronger than expected 230K jobs, which has priced in the highest 2-year yield seen in the US since 2008. Jobless claims were lower than expected dropping to 40+ year lows and signalling that the unemployment rate will likely dip. A strong jobs headline and more importantly a solid gain in hourly earnings will make a stronger case for a December rate hike.
The US dollar is higher across the board versus major pairs ahead of the NFP today, most notably against the Japanese yen – although the USD/JPY weakened on Thursday as risk assets sold off. EUR/USD is trading close to 1.1500 ahead of the jobs report, as fundamental data in the US has supported the USD while economic indicators have softened in Europe in tandem with rising concerns about the Italian budget.
Friday has a thin calendar on the offering for the GBP, with only the low-tier Halifax House Index at 07:30 GMT, as Brexit continues to be the major driver behind the Pound, and leaders from both the European Union and Ireland are strongly urging the UK to stop wasting time and begin finding real-world, workable solutions.
Oil prices rose on Friday morning in Asia with markets continuing to pre-empt the impact of U.S. crude sanctions against Iran that take effect in November. The gains helped claw back some of the losses from the previous session due to rising U.S. inventories and after Saudi Arabia and Russia said they would raise output to at least partly make up for expected disruptions from Iran.
Gold prices continue to trade sideways and appear to be support ahead of Friday’s payroll report. A stronger than expected payroll gain or accelerating wage inflation, will likely lift the dollar and pave the way for lower gold prices. The anticipation for the NFP report on Friday could point to another interest rate hike and further pressure the yellow metal.