Welcome to TGI/NFP Friday!
Asian equities were strong overnight, despite low participation and a cautious tone ahead of today's all important NFP report. In FX space, GBP continued to suffer after the dovish data dump yesterday although many analysts believe the market's reaction is overdone. All I will say is that fighting momentum is a dangerous game.
We also saw the RBA's Statement on Monetary Policy overnight...the RBA is expressing no urgency to move in the wake of the rise in mortgage rates. The RBA actually remains very relaxed with their dovish view and a Q1 2016 cut remains the base scenario.
Looking ahead, today we have NFP. The median of forecasts updated over last 2 days is 200k so the published Bloomberg median of 185k may understate the actual market thinking. We could see a small USD pullback if the 185k published median is hit, since the market is now discounting a 70% chance of a hike in December and the consensus of a strong number today. We would ultimately need a 220k+ number AND significant revisions to prior data, to get another leg higher in the Greenback.
We also have Canadian Unemployment data, which is expected to print a better number than last time, and maybe reduce the unemployment rate to 7% from 7.1%.
In the way of speakers, at 8:45 GMT ECB's Praet speaks, then at 10:00 ECB's Mersch speaks and finally at 14:15 St. Louis Fed President Bullard speaks.
Charts for today:
I will be refraining from trading this morning, preferring to wait for NFP. I sense the possibility of a disappointment today which, along with the large short positioning in the Euro, might give way to a squeeze. But definitely no trades before or immediately after the number.
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