Friday, August 5: Five things the markets speak of
Investors continue to look signs that the US economy remains on solid ground, and "ancestor" today of all human waste, non-agricultural employment (NFP), will provide another insight into the health of the US economy.
employment print last month showed that the US added a whopping 287k + jobs in June, signaling a new momentum in the US labor market. Today's report in July (forecast + 180k, + unemployment rate of 4.8%) should cancel disappointing + 38k as May as a print outliers.
US ADP report this week rose + 179k in July, evidence that the US labor market remains strong, even if job creation slows the economy is close to full employment.
also boost market optimism for the title today is the weekly claims U.S yesterday. Despite a slight increase last week, it remains at a level consistent with stable employment (+ 269K).
A strong dealers will print reassessing the likelihood of a Fed rate hike this year, by default, this will impact on the strength of the dollar index, and thus set the tone for operations changes next week. A small print and the dollar index will renew downward trajectory this week.
All will be revealed at 08:30 EDT.
1. Investors digest "hammer" the action of the BoE
Unlike other central banks in the end (RBA, RBNZ, ECB and BoJ ), the Bank of England (BoE) has managed to overwhelm the markets pulling out all the stimulus levers available to them to fight against the shock of Brexit and in the process, very clear that the MPC could still pull the levers again more difficult.
Carney and his colleagues makers cut interest rates to a low of 0.25%. In addition, the BoE announced a series of other measures to stimulate the economy, including a diet + £ 100B to force banks to pass on the lower interest rate for households and businesses. He also promised to buy £ 60B + government bonds + £ 10B U.K. and corporate bonds. Governor Carney, in his press conference, told the markets that it was possible to reduce interest rates. Actions which are suitable for recording "short" sterling positions on the market. This put the pound (£ 1.3139) on the back foot and gilt yields 10 years plunging to a new record low costs (+ of 0.641%).
2. Dollar lower ahead of jobs report
The fear that non-farm payroll (NFP) will not strong enough for the Fed to raise interest rates soon left investors reluctant to buy the dollar.
position in the main event of this morning the dollar is weak, the USD / JPY at ¥ 100.94, down 0.3%, and GBP rose + 0.25 % to $ 1.3139, despite the BoE stimulus announcements yesterday. While the EUR / USD is trading up + 0.2% to € 1.1148.
Dollar bulls can hope to draw a strong title to move the current market perception that there is a "low" short-term likelihood of rate increase soon. Fed fund futures currently do not see a likelihood of a rise in Fed up 12% in September and 32% an increase in December. There are only five months fixed income dealers were entertaining the idea of the possibility of four rate hikes by year end. Expect the probable change likely theses based on the result of the non-farm employment report today.
3. Global equities get the green light
Global equities rose in trading overnight, thanks to aggressive stimulus by the BoE, although traders remain cautious about the strength of US jobs data this morning.
equity bulls continue to point to the action of the central bank to lower interest rates and buying bonds as the main instigator for the stocks in the dark. With sovereign yields remain so low or negative, there is no incentive to want aggressive product own debt.
The Nikkei Stock Average was up 0.3%, with S & P ASX / 0 trading 0.4% higher to Australia. Kospi in South Korea rose 0.7%, while the Hang Seng of Hong Kong rose 1.3%.
The story is the same in Europe before the open U.S. European shares head for their biggest rally in two days to three weeks on growing confidence that central banks will maintain a favorable monetary policy. focus on the market will be on the ECB in September
Indices :. Stoxx 50 + 0.3% to 2,938, FTSE + 0.3% to 6759, DAX + 0.1% to 10 233, CAC-40 + 0.5% in 4367, 35 IBEX- 0.8% in 8452, FTSE MIB + 0.9% at 16,391, SMI + 0.3% in 8106, S & P 500 Futures 0.2%
4. rebounds gross low in two months
the crude oil prices are well off lows in mid-week, with Brent up + $ 43.77 and WTI + around $ 41.50, but both contracts continue to see volatile trading.
The offer for "black substance" again came fundamental reports this week.
for natural gas futures have seen trade very agitated after the EIA inventory report showed an unexpected withdrawal of the amount of fuel in storage. Gasoline inventories fell -3.3m barrels, nearly 10 times higher than expected.
Even the weather has had an impact. The warmer weather forecasts in most Americans were cited for the increased demand, but it should be temporary gains with summer demand ends shortly.
Expect the same old arguments to weigh on futures prices for crude. The overhang of crude and refined products continue to threaten to drag the price in the high $ 30 a barrel is territory.
Gold is currently trading at the top of its three-week high on the back of a weaker dollar and an uncertain time for a rate hike by the Fed. Spot gold is trading up + 0.40% to 1.361.08 $, its highest point since July 11. Bulls are eyeing the $ 1400 handle if the employment report disappoints morning.
5. Loonies move to be dictated by the ratio of the Canada Employment
Market focus is certainly the NFP, however, Canada will also publish own employment report.
Market expectations are for a solid feel as + 10k and the unemployment rate to tick up 6.9%. Not exactly the pace of its largest trading partner south of the border, but an impression that will certainly last months of disappointing as negative asset (-0.7k).
The loonie markets (C $ 1.3022) love story was very positive correlated to the end of this week to the prices of commodities. If North America gets to show a positive employment situation, expect USD / CAD to want to test its recent support levels below the psychological 1.3000 C $ handle.
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