Spreadex Market Update
USD Rallies Ahead of NFP As Market Pricing Shows Expectations Split Ahead of November FOMC
The US Dollar climbed again yesterday and is trading in the green over today’s European open as traders brace for the September NFP today. In terms of the numbers, the market is looking for the 248K on the NFP, down from 315k prior along with the unemployment rate to hold at 3.7% and earnings to hold at 0.3%.
There has been plenty of speculation recently about a potential Fed-pivot, reflected in the latest market data showing that a 75bps hike in November is only priced at around 75%. As such, if we see any upside surprises in today’s data there is plenty of room for USD longs to rebuild following the recent correction in the Dollar. Equally, any downside surprises will likely see pricing for a 75bps hike drop further, pulling USD lower near-term.
Key Factors for Today
- USD rallies ahead of jobs data – all eyes on NFP
- Equities mostly lower amidst fresh USD rally
- Stronger USD sends risk FX lower – safe-havens gain
- Metals hold onto gains – oil a little softer on Friday
Coming Up
- CAD Canadian Unemployment rate
- USD US labour reports – NFP, Unemployment rate, average hourly earnings
- GBP BOE Quarterly bulletin
Equities Weighed on By Fresh USD Strength
The bounce in USD yesterday has put an end to the recent equities rebound for now. Markets across the board were seen giving back gains as the greenback rallied. We’re seeing some green across the European today, however. The Nikkei and the FTSE are both seeing decent bids given the drop in JPY and GBP amidst the fresh upturn in USD. For risk markets now, the US jobs report today will be the key directional catalyst for next week.
Twitter Shares Drop Following Deal Complications
Shares in Twitter plunged yesterday as the company was seen refusing Elon Musk’s $44 billion takeover bid. The social media company is pushing ahead with its plan to take Musk to court over his earlier attempts at reneging on the purchase. Having this week notified Twitter that he will press ahead with the initial takeover at $54.20 a share, there are now issues with $13 billion in debt financing. A judge has postponed the trial date until October 28th to give Musk time to complete the deal.
Risk-FX Falls, Safe-Havens Rally
In FX, the resurgent strength in USD yesterday has fuelled a reversal in recent themes sending GBP, EUR and risk currencies lower while JPY and CHF have seen better safe-haven demand. GBP was knocked lower on the back of a speech by new UK PM Liz Truss who doubled down on her calls to focus on growth. GBP was seen giving up recent gains as traders reacted negatively to the speech, likely also reflecting growing political uncertainty as labour’s polling-lead grows further.
Metals Hold Onto Gains – Oil Slightly Softer
In the metals and commodities space, both gold and silver have managed to hold onto recent gains, despite the uptick in USD. Metals have traded higher over the week and are now stabilised at those highs as traders await the jobs report from the US today. Oil prices are looking a little softer at the European open on Friday though remain at recent highs following the OPEC+ announcement on Wednesday that it will cut supply by 2 million barrels per day.
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