Market Roundup
- U.S. Jan nonfarm payrolls rise by 151k vs forecast 190k, unemployment rate at 8-yr low (4.9%).
- US average hourly earnings +0.5% vs 0.3% forecast, participation rate 62.7% vs 62.6% previous.
- Strong earnings growth overcomes miss on payrolls.
- Markets fear wages, unemployment will keep Fed in play, equities weaken, USD rises.
- Market view of next U.S. rate hike shifts into 2016 after jobs data (CME FedWatch Dec hike 51%).
- GDPNow model forecast for real GDP growth in Q1 '16 is 2.2% up from 1.2% on Feb 1.
- Further BOJ action possible if strong yen threatens inflation expectations- Abe Adviser Honda.
- Brazil aims for 2016 budget freeze of $13 billion to meet fiscal savings goal -Folha de S. Paulo.
- Japan signs investment pact with Iran to boost economic ties- AP.
- Argentine peso black market rate stronger than official rate, reversing trend.
Looking Ahead - Economic Data (GMT)
- 23:50 Japan Current Account NSA JPY* Dec forecast 987.0b, 1143.5b-previous
- 01:30 Japan Overtime Pay*Dec 1.10%-previous
- 05:00 Japan Economy Watchers Poll* Jan 4870.00%-previous
- 01:00 China FX Reserves (Monthly)* Jan forecast 3.20t, 3.33t-previous
Looking Ahead - Events, Other Releases (GMT)
- 22:00 Japan- Bank of Japan releases summary of debate at January's policy meeting
Currency Summaries
EUR/USD is likely to find support at 1.045 levels and currently trading at 1.1154 levels. The pair has made session high at 1.1246 and hit lows at 1.1109 levels. The U.S. dollar gained against euro on Friday after data showed U.S. wages picked up in January, indicating greater inflation and denting the view that the Federal Reserve would not hike interest rates at all this year. Average hourly earnings increased 0.5 percent, last month, leaving the year-on-year gain in earnings at 2.5 percent, U.S. Labor Department data showed. The wage data was sufficient to boost dollar against major pairs even though non-farm payrolls increased by just 151,000 jobs last month, against forecast at 190,000. The dollar had declined sharply in the past two sessions on concerns that Federal Reserve would not hike interest rate due to weak global economic growth.
GBP/USD is supported in the range of 1.4410 and currently trading at 1.4501 levels. It reached session high at 1.4587 and hit low at 1.4451 levels. The British pound slipped lower from one-month high against the dollar on Friday, after a poll showed favorable results for Britain to leave the European Union, causing more anxiety among investors. In the early US session, pound lost some ground against the dollar after a key jobs report showed a pickup in U.S. wages in January, indicating greater inflation would still keep the door wide open for rate hike by the Federal Reserve this year. Sterling was down 0.7 percent at $1.4490, having hit a one-month high of $1.4672 on Thursday after Bank of England chief Mark Carney quashed talk that interest rates could be cut in the coming months.
USD/CAD is supported at 1.3795 levels and is trading at 1.3914 levels. It has made session high at 1.3916 and lows at 1.3711 levels. The Canadian dollar weakened against US dollar on Friday after weak Canadian jobs data showed Canadian economy's struggles to cope when there is slump in oil prices, on the other hand oil prices declined modestly after positive U.S. jobs data. U.S. crude prices were down 1.07 percent to $31.38 a barrel, while Brent crude lost 0.78 percent to $34. bet that U.S. Federal Reserve's interest rates hike plans could still be on the table after the U.S. employment report showed a long-awaited surge in wages and an unemployment rate at an eight-year low. The currency's strongest level of the session was C$1.3710, while its weakest level was C$1.3816.
AUD/USD is supported around 0.7000 levels and currently trading at 0.7066 levels. It hit session high at 0.7218 and made session lows at 0.7062 levels. The Australian dollar declined against US dollar on Friday after data showed U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but rising wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm. The Australian dollar edged lower towards $0.7064 after the data, losing all the ground gained on previous session against dollar. Also underpinning the Aussie were comments by the Reserve Bank of Australia (RBA) seeing potential improvement in the economy.In a quarterly report issued on Friday, the central bank reiterated that any cut in interest rates would depend on jobs data and whether recent financial market turbulence pointed to a weaker global economy.
Equities Recap
European equities ended lower after a choppy session on Friday, with the sell-off accelerating in late business after U.S. jobs data left investors guessing about the possibility of an interest rate hike this year.
UK's benchmark FTSE 100 closed down by 0.9 percent, the pan-European FTSEurofirst 300 ended the day down by 0.86 percent, Germany's Dax closed down at 1.3 percent, and France's CAC finished the day down by 0.7 percent.
US stocks declined on Friday following weak forecasts from technology companies, including LinkedIn, and worries about lofty valuations.
Dow Jones closed down by 1.30 percent, S&P 500 ended the day down by 1.85 percent, Nasdaq finished the day down by 3.24 percent.
Treasuries Recap
U.S. Treasury debt prices ended higher on Friday as concerns about falling oil and stock prices added a safety bid to bonds, which had earlier weakened after a report showed wages grew in January.
Benchmark 10-year notes gained 5/32 in price to yield 1.85 percent, down from 1.86 percent late on Thursday.
Commodities Recap
Oil prices ended the week lower in choppy trading on Friday, snapping two weeks of gains, as a frenzy of speculation about a possible deal between top oil producers clashed with concerns about a growing supply glut.
Global benchmark Brent crude futures settled down 40 cents, or 1.2 percent at $34.06 a barrel, after trading between $35.14 and $33.81.U.S. crude futures closed 83 cents, or 0.1 percent lower, at $30.89 a barrel, after touching a high of $32.45.
Gold rose to a three-month high in volatile trade on Friday, as a mixed U.S. jobs report prompted investors to reassess the outlook for U.S. interest rates this year, putting bullion on track for its strongest weekly performance in more than a year.
Spot gold initially rose after the jobs report but then fell to a session low of $1,144.96 an ounce as some focused on the rise in average hourly earnings, which may have revived the prospect of rate hikes. By 3:11 p.m. EST (2011 GMT) it rose to a new high at $1,165.50, up 0.8 percent and the highest since Oct. 28.
U.S. gold futures for April settled up 20 cents at $1,157.70 an ounce.
