Spreadex Market Update
Uptick in US Unemployment Raises 50bps December Chances
Friday’s US jobs data proved a mixed bag with the headline NFP coming in above expectations, 261k vs 197k expected, as with the average hourly earnings figure, 0.4% vs 0.3% expected. However, USD fell back sharply as the unemployment rate was seen rising back to 3.7% from 3.5% prior. The data has added to fears of a slowdown in the US economy, strengthening conviction in a smaller Fed hike in December. US fell heavily on Friday, sending equities prices higher and, although we are seeing a better start for USD on Monday, equities are fighting to hold onto gains.
Key Factors for Today
- USD seeing a better start following heavy selling on Friday
- US unemployment rate unexpectedly higher
- Mixed start for equities – trying to retain Friday’s gains
- EUR & CHF lead in FX – JPY weakest on reduced safe-haven demand
- Metals and oil stall following Friday’s moves
Coming Up
- EUR - ECB’s Lagarde speaks
- EUR – Eurogroup meetings
- USD – Fed’s Collins and Mester speak
Stocks Clinging to Friday’s Gains – FTSE Under Pressure
Equities markets are fighting to hold onto Friday’s gains, despite the US Dollar seeing better demand across the European open on Monday. Some positive developments within the China-reopening backdrop are helping lift risk sentiment here. In Asia, the Nikkei and the Hang Seng are both trading higher today, with the latter up around 5% so far. In the US, the S&P is in the green today also, though still within Friday’s range for now. The FTSE has come under selling pressure today amidst ongoing UK political uncertainty while, in Europe, the DAX is seeing a softer open also.
Coinbase Misses Forecasts Again
US earnings season continues today with Palantir Tech and Activision Blizzard both due to report. At the end of last week, Coinbase reported dismal Q3 figures, underscoring fears for the company amidst the ongoing demise of crypto trading interest. Coinbase reported EPS of -$2.43, below the -$2.43 on revenues of $590 million, below $639 estimates. Shares in the company are now almost 30% from the October highs on the back of last week’s decline.
EUR & CHF Lead in FX – JPY The Weakest
In FX, we’re seeing a better start for USD. However, on the back of heavy post-NFP losses on Friday, EUR and CHF are the strongest performers today. Both currencies are trading well against USD. Risk currencies such as AUD and NZD are managing to hold onto gains from the end of last week. However, some residual fears around China-reopening plans are hampering these currencies today. JPY has been the weakest performer in the g10 block. The bounce back in equities from the end of last week has sapped safe-haven demand for the currency while we’re also seeing a drop in chatter regarding any potential BOJ intervention.
Metals & Oil Falter Following Friday’s Rally
In the metals and commodities space, both gold and silver are seeing a softer start to the week amidst better demand for USD. Both metals rallied firmly on Friday, capitalising on the USD sell-off. If USD weakness resumes this week, both metals look poised to break recent highs. Crude oil is seeing a much more subdued start to the week following the explosive move higher we saw on Friday. However, while crude futures remain above the broken bear channel top, the outlook remains in favour of further upside.
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