Market Roundup
• US February job gains 235k v 190k forecast, 238k previous; jobless rate steady at 4.7%.
• US Avg earnings m/m 0.2% v 0.3% forecast, 0.2% previous; participation rate up, U6 underemployment falls.
• NY Fed’s Nowcast sees US economy growing 3.19% in Q1 up from 3.09% on Mar 3; Q2 at 3% from 2.91%.
• EU Chairman Tusk: EU ready to respond to Britain's exit note "within 48 hours”.
• German imports soar in January, current account surplus shrinks; Imports up 3% on the month, exports +2.7%.
• French Elabe poll: Almost three-quarters of French against ditching euro, 44% ‘very opposed’.
• Euro zone bonds jolted by central banks "unplugging life support"; markets brace for U.S. rate hikes, change in ECB stance.
• Euro rises to 3-week high on Bloomberg report ECB discussed possibility of rate hike before QE end.
• Investors bet on Euro Zone hike in early 2018, Forward Eonia rates for Mar ‘18 ECB meet at -25bps, 10 bps abv current levels.
Looking Ahead - Economic Data (GMT)
• 21:45 New Zealand Food Price Index* Feb 2.8%-previous
• 23:50 Japan Corp Goods Price MM Mar 0.6%- previous
• 23:50 Japan Corp Goods Price YY* Mar -1.2%- previous
• 23:50 Japan Machinery Orders MM Jan forecast 0.5%, 6.7%- previous
• 23:50 Japan Machinery Orders YY* Jan forecast -3.3%, 6.7%- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.0615 levels and currently trading at 1.0695 levels. The pair has made session high at 1.0700 and hit lows at 1.0618 levels. Euro rose against the dollar on Friday after a report that the European Central Bank had discussed the possibility of raising interest rates before the end of its quantitative easing program. Sources told some ECB policymakers had suggested hiking rates from their current record lows before the end of QE stimulus, but that the discussion was brief, and there was not broad support for the idea. The euro rose as high as $1.0677 against the dollar, its strongest since Feb. 16. It was last at $1.0666, up 0.85 percent. The dollar index, which tracks the greenback against six major world currencies, fell to a session low of 101.380 following the report on the ECB discussions. The index had sunk earlier after the release of the February U.S. non-farm payrolls report that showed wages rose less than expected. That tempered expectations for a spate of interest rate increases this year by the Federal Reserve. The dollar index, which tracks the greenback against six major world currencies, fell 0.53 percent to 101.310, its lowest in nearly a week.
GBP/USD is supported in the range of 1.2130 levels and currently trading at 1.2182 levels. It reached session high at 1.2188 and dropped to session low at 1.2146 levels. Sterling declined against dollar on Friday as sterling came under selling pressure after data showed U.S. employment increased more than expected in February and wages rose steadily, providing the Fed a green light to raise rates at a policy setting meeting on March 15. Nonfarm payrolls rose by 235,000 jobs as the construction sector recorded its largest gain in nearly a decade due to unseasonably warm weather. Fed Chair Janet Yellen signaled last week the U.S. central bank is set to raise rates this month if employment and other economic data hold up. The Fed meets March 14-15.With inflation edging up closer to the Fed's 2 percent target, traders were pricing in a 92 percent chance of a rate increase at the Federal Open Market Committee's meeting next week, up from 85 percent before the data. Sterling inched down 0.1 percent to $1.2154 , having earlier hit an eight-week low of $1.2133. It has lost around 2.5 percent against the greenback in the past two weeks, with its falls exacerbated by a simultaneous dollar rally on the view the U.S. Federal Reserve will hike interest rates next week.
USD/CAD is supported at 1.3387 levels and is trading at 1.3450 levels. It has made session high at 1.3242 and lows at 1.3484 levels. The Canadian dollar strengthened against its U.S. counterpart on Friday as stronger-than-expected domestic jobs data offset risks to the economy from an uncertain trade outlook.The 15,300 increase in Canadian jobs last month topped economists' expectations for a gain of 2,500, data from Statistics Canada showed. It extended the labor market's recent strong run as full-time hiring jumped. The chances of a Bank of Canada interest rate hike this year nudged up to nearly 50 percent, data from the overnight index swaps market showed. It was less than 30 percent after the Bank of Canada left rates on hold at the start of the month and focused on the "significant uncertainties" facing the economy. Increased chances of a Bank of Canada rate hike came as data showed U.S. employers hired workers at a robust pace in February, which could give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth. U.S. crude prices were unchanged at $49.28 a barrel, steadying after they dropped to their lowest in more than three months on oversupply concerns.The Canadian dollar was last trading at C$1.3464 to the greenback, or 74.27 U.S. cents, stronger than Thursday's close of C$1.3508, or 74.03 U.S. cents.
AUD/USD is supported around 0.7490 levels and currently trading at 0.7551 levels. It hit session high at 0.7554 and made session lows at 0.7485 levels. The Australian dollar stayed near 0.7544 levels on Friday after payrolls report seals view on U.S. rate hike next week. U.S. employers added 235,000 workers in February, beating the 190,000 hiring forecast among analysts polled. However, there had been expectations of an even stronger figure following a report from payroll processor ADP on Wednesday that showed a 298,000 increase in private sector jobs. Wage growth also missed forecasts, rising 0.2 percent versus an expected 0.3 percent increase. With inflation edging closer to the Fed's 2 percent target, traders were pricing in a 92 percent chance of a rate increase at the Fed Open Market Committee's meeting next week, up from 85 percent before the data. The Australian dollar held at $0.7519, up 0.24 percent, after touching a trough of $0.7491 overnight. It was on track to fall 1 percent for the week. After gaining in the first two months of 2017, the Aussie has fallen 1.8 percent in March, largely due to a resurgent U.S. dollar.
Equities Recap
European shares came off highs on Friday, as growing talk about central bank tightening in the region hit utilities and export-oriented stocks but continued to boost the heavyweight banking sector.
UK's benchmark FTSE 100 closed up by 0.5 percent, the pan-European FTSEurofirst 300 provisionally closes up up by 0.06 percent, Germany's Dax ended up by 0.5 percent, France’s CAC finished the day up by 0.1 percent.
U.S. stocks rose on Friday after a solid jobs report pointed to strength in the domestic economy and supported expectations the Federal Reserve will raise interest rates next week.
Dow Jones closed down by 0.22 percent, S&P 500 ended down by 0.34 percent, Nasdaq finished the day down by 0.41 percent.
Treasuries Recap
U.S. Treasury yields fell on Friday, with benchmark yields receding from 12-week highs after data on domestic hiring last month came in stronger than consensus forecasts but fell short of the most optimistic views.
In choppy trading, benchmark 10-year Treasury yields were last at 2.578 percent, down 2.0 basis points from late on Thursday. They rose to 2.624 percent earlier on Friday, a level last seen in mid-December, Reuters data showed.
The 10-year yield rose more than 25 basis points in two weeks for the biggest such increase since November following Donald Trump's presidential win.
Commodities Recap
Gold recovered on Friday from an early drop to five-week lows after a U.S. non-farm payrolls report for February failed to meet elevated expectations, prompting a drop in the dollar and Treasury yields.
Spot gold was up 0.1 percent at $1,202.36 an ounce by 2:56 p.m. EST (1956 GMT), after falling to $1,194.55, its weakest since Jan. 31. U.S. gold futures for April delivery settled down 0.2 percent at $1,201.40.
Oil skidded again on Friday, pushing prices to three-month lows as investors continued to flee bullish positions on worries that OPEC-led production cuts have not yet reduced a global glut of crude.
