As I noted last night, I had been thinking that we would see an improvement in today’s US and Canadian job reports but they reports came in even better than I could have imagined. WOW!
The positive job numbers took the street by surprise as well. The loonie has taken flight against nearly all other majors confirming that there is a lot more to the Canadian economy than just the oil and gas industry and that another Canadian rate cut looks unlikely with the economy already starting to rebalance.
USD has soared to the top of the league today outperforming all other majors and sending gold sharply lower as the strong jobs report stirs up speculation that the Fed could start raising interest rates sometime this summer. (I think this is too little too late for June though) Fed speculation may continue through this month’s FOMC decision and member projection updates.
US stocks are dropping back on the news within their broader trading ranges. With earnings season over and corporate news light, interest rate liftoff speculation could keep pressure in indices in the near term.
Interestingly, despite the stronger USD and OPEC decision to maintain production levels, crude oil is trading up a bit today. Crude had sold off hard ahead of the OPEC meeting so today’s action may be short covering now that the news is out and ahead of the weekend.
Between all this and Greece’s decision to bundle all of its IMF payments to June 30th the same day its bailout program ends means that the street has a lot to digest today and that markets may remain active for trading right through this month at least.
Corporate News
There have been no major corporate announcements so far this morning.
Economic News
Economic reports released overnight and this morning include:
OPEC meeting no change to production quotas, next meeting Dec 4
US nonfarm payrolls 280K vs street 225k
US nonfarm payrolls revision previous 223K revised to 221K
US private payrolls 262K vs street 220K
US unemployment rate 5.5% vs street 5.4%
US average hourly earnings 2.3% vs street 2.2%
US participation rate 62.9% vs previous 62.8%
Canada jobs change 59K vs street 10K vs previous 19K
Canada full-time jobs 31K vs street (10K) vs previous 47K
Canada part-time jobs 28K vs street 40K vs previous (66K)
Canada unemployment rate 6.8% as expected
Australia construction PMI 47.8 vs previous 47.0
Japan leading indicator 107.2 as expected
Germany factory orders 0.4% vs street (0.6%)
Norway industrial production (3.4%) vs previous 2.3%
UK 1-yr inflation expectation 2.2% vs previous 1.9%
Upcoming significant announcements include:
1:00 pm EDT US Baker Hughes drill rig count previous 875
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