Market Roundup
- U.S. Dec nonfarm payrolls rise by 292k vs consensus 200k, prior months revised +50k.
- U-6 underemployment rate steady at 9.9%, avg hourly earnings steady at 0.2% despite employment gains.
- Weak U.S. wholesale inventories (-0.3%) point to slower Q4 growth.
- Oil resumes fall, stocks dip (7th consecutive day) despite bumper jobs data.
- Safe-haven bonds hold firm even as calm returns to world markets.
- Copper hovers near 2009 lows, focus on weak China demand, some hedging expected by recent lows.
- Fed's Williams: economy still has a good head of steam, 4 hikes in '16 not baked in cake may be higher or lower, will take Fed 6-yrs to get balance sheet back to normal, Fed likely aims for 3-3.5% FF rate.
- Fed's Lacker: once USD stabilizes core inflation should move back to 2%.
- U.S. economy seen expanding 0.8 percent in Q4 - Atlanta Fed GDPNow.
- Mexico's central bank sells USD 400 million as peso weakens to all-time high by 17.975.
Looking Ahead - Economic Data (GMT)
- Sat 01:30 China PPI YY* Dec forecast -5.8%, -5.9%-previous
- Sat 01:30 China CPI YY* Dec forecast 1.6%, 1.5%-previous
- Sat 01:30 China CPI MM*Dec forecast 0.4%, 0%- previous
- --:-- China FDI (YTD)* Dec 7.9%- previous 16:00 China M2 Money Supply YY*Dec forecast 13.5%, 13.7%- previous
- 16:00 China New Yuan Loans*Dec forecast 700.0b, 708.9b- previous
- 16:00 China Outstanding Loan Growth*Dec forecast 14.8%, 14.9%- previous
Looking Ahead - Events, Other Releases (GMT)
Currency Summaries
EUR/USD is likely to find support at 1.0880 levels and currently trading at 1.0924 levels. The pair has made session high at 1.0924 and hit lows at 1.0804 level dollar inched higher against euro on Friday as investors focused on the possibility of more Federal Reserve interest rate hikes after stronger-than-expected U.S. jobs data. However, the rise was limited by worries over China's economic growth. The dollar's rebound from Thursday's drop picked up after data showed U.S. employers added 292k workers in December, above forecasted figures at 200k.The gains faded in quick succession as traders focused on the absence of wage growth last month, which economists reckoned would cause U.S. inflation to struggle to rise to 2 percent, the Fed's goal. The euro was down 0.3 percent at $1.0895, paring its weekly gain against the dollar to 0.4 percent.
GBP/USD is supported in the range of 1.4500 and currently trading at 1.4522 levels. It reached session high at 1.4585 and hit low at 1.4503 levels. Sterling slipped to fresh 9-month low against the dollar on Friday, as investors bet the Bank of England will not raise interest rates until accelerated for the pair after better than expected U.S. jobs number drove investors to the dollar capping a week which saw global stocks slide as China's rapidly depreciating currency sent shockwaves. That left sterling, which often moves in tandem with riskier assets, on track to post the worst performance among developed currencies so far this year. Sterling was down 0.6 percent at $1.4523, a level not seen since 9 months. On the data front, Data released on Friday showed Britain's trade deficit with the rest of the world narrowed in November, as cheaper oil reduced the cost of imports, could do nothing to boost the pound.
USD/JPY is supported around 117.00 levels and currently trading at 117.48 levels. It hit session high at 118.30 and made session lows at 117.41 levels. Japanese yen continued to rise against US dollar despite positive US jobs data on Friday as the Japanese yen continued to attract investors as further doubts arised about the Chinese economic growth. U.S. payrolls inched higher in December and the job count for the prior two months was revised sharply higher, indicating US economy on solid ground despite a economic growth trouble internationally. Nonfarm payrolls increased by 292,000 last month, the Labor Department said on Friday, as hiring got a boost from unseasonably warm weather. The unemployment rate held steady at a 7-1/2-year low of 5 percent even as more people entered the labor force, a sign of confidence in the job market. Against the yen, the greenback clung to a 0.2 percent gain, at 117.87 yen, bringing its weekly loss to 2.2 percent, which was the largest in four months.
USD/CAD is supported at 1.4131 levels and is trading at 1.4172 levels. It has made session high at 1.4178 and lows at 1.4104 levels. The Canadian dollar slipped against a broadly stronger U.S. dollar on Friday on continued fears of more turmoil in China's economy and weakening oil prices which fell further on renewed global growth concerns. Investors worry that China, the second-largest economy in the world, is growing more slowly than expected and could further weigh on commodity prices and global economic growth. On the data fron,Canada added better than expected in December, partly making up for heavy losses the previous month, while the unemployment rate held at 7.1 percent. Statistics Canada said on Friday the economy created 22,800 jobs in December, far more than the forecasted figure of 10,000 gain. The loonie's strongest level of the session was C$1.4086, while its weakest was C$1.4172. On Friday, it hit its weakest since July 2003 at C$1.4170.
Equities Recap
European shares fell on Friday, as the worries about China's slowing economy caused European equities to suffer its worst weekly loss since August 2011.
UK's benchmark FTSE 100 closed down by 0.4 percent, the pan-European FTSEurofirst 300 ended the day down by 1.29 percent, Germany's Dax closed down at 1.2 percent, and France's CAC finished the day down by 1.5 percent.
US stocks posted their worst 5-day start to a year on record on Friday on continued worries that a slowdown in China could damage the global economy, despite stronger than expected U.S. jobs growth report.
Dow Jones closed down by 1.03 percent, S&P 500 ended the day down by 1.08 percent, Nasdaq finished the day down by 0.98 percent.
Treasuries Recap
U.S. Treasury yields dipped on Friday, with short- and medium-term yields hitting multi-week lows, on safety bids and after data showing a December surge in U.S. jobs growth was quelled by a lack of wage gains.
U.S. 10-year Treasury notes were last up 10/32 in price to yield 2.116 percent on Friday, from 2.153 percent late Thursday.
U.S. 30-year Treasury bonds were up 13/32 in price to yield 2.906 percent, from 2.926 percent late Thursday.
U.S two-year yields were on track for their biggest yield decline since early Oct. 2014, while 30-year yields were on track for their first decline in four weeks.
Commodities Recap
Gold declined lower from earlier nine-week high but was still on track for its strongest week since August on Friday as stronger-than-expected U.S. payrolls data boosted the dollar and stock markets, shoring up a recovery in equities.
Spot gold initially rose to the highest since early November in overnight trade at $1,112 an ounce. It was down 0.9 percent at $1,098.84 an ounce at 2:15 p.m. EST (1915 GMT), breaking a four-day winning streak.
U.S. gold futures for February delivery settled down 0.9 percent at $1,097.90.
Oil declined for a fifth straight day on Friday, as the concerns related to Chinese economy put the oil prices under further pressure.
Brent settled 20 cents lower at $33.55 a barrel. It hit a session low of $32.78, after sliding on Thursday to $32.16, the lowest since April 2004.
WTI ended 11 cents lower at $33.16. It fell to $32.64 earlier in the day, after falling to $32.10 on Thursday, its lowest since December 2003.
