he US Dollar continued to climb today against other major currencies as traders took advantage of a light day for news to position for tomorrow’s nonfarm payrolls report. ECB minutes didn't say anything about tapering or an end to QE which was also denied by an official again today sending EUR back down and leaving the Fed as the most hawkish central bank at the moment. Positive economic news and Fed member comments this week have increased speculation on a December rate hike and even the possibility of a November increase has picked up off zero although it remains unlikely.
The potential winding down of the easy money party in the US kept a lid on stocks today. The Dollar was particularly strong against JPY, building on its recent breakout, and GBP which fell to another thirty year low. USD also gained against resource currencies like CAD, AUD and NZD with gold getting hammered again. Lower metal prices could impact trading in mining stocks today.
Twitter took a nosedive falling 20% toward the $20.00 level on reports that Google and Disney may not bid for the social media company after all. It continues to trade above where it was when takeover rumours started with Salesforce.com apparently still in the running and maybe others, who knows?
Friday’s nonfarm payrolls report may spark another round of Fed speculation trading. Fed members have lowered the bar in recent months for job creation into the 50-100K area and ADP payrolls were about 150K. Jobless claims remain really low but I still think employers may be holding back on hiring ahead of the election. Politically, the Democrats could spin a strong report as confirmation their economic policies working while the Republicans could jump on a weak report as a need for change. Based on this, I’m going to go middle of the road and guess 180K, a bit above the 172K street estimate.
Canada jobs are also due Friday morning. The street is expecting a retrenchment in September from a strong August. I think we’ll see more of a seasonal shift between full and part-time jobs with seasonal summer employment ending. July GDP was not as bad as feared after results beat expectations that had been dampened down by the Bank of Canada. Still, the Bank has been calling for a second half improvement, and if we don’t get one, pressure for a rate cut could grow. My Labour Force Survey guess is 15K, I think things are turning around slowly.
There have been no major announcements after the US close today
Significant announcements released overnight include:
US jobless claims 249K vs street 256K
US natural gas 80 BCF vs street 65 BCF
Germany factory orders street 1.6%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
9:30 am AEDT Australia construction PMI previous 46.6
11:00 am AEDT Japan real cash earnings previous 1 8%
4:00 pm AEDT Japan leading index street 101.6
7:00 am BST Norway industrial production previous 0.5%
7:00 am BST Germany industrial production street 0.4% vs previous (1.2%)
7:45 am BST France industrial production street (1.3%)
8:30 am BST UK Halifax house prices street 5.9%
9:30 am BST UK industrial production street 1.3% vs previous 2.1%
9:30 am BST UK manufacturing production street 0.8%
9:30 am BST UK trade balance street (£4.0B)
3:00 pm BST UK NIESR GDP estimate previous 0.3%
8:30 am EDT US nonfarm payrolls street 172K vs previous 151K
8:30 am EDT US private payrolls street 170K vs previous 126K
8:30 am EDT US unemployment rate street 4.9%
8:30 am EDT US average hourly earnings street 2.6% vs previous 2.4%
8:30 am EDT Canada employment change street 7K vs previous 26K
8:30 am EDT Canada full-time jobs previous 52K
8:30 am EDT Canada part-time jobs previous (26K)
8:30 am EDT Canada unemployment rate street 7.0%
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