5 Nov: Solid NFP allows a US$ recovery, weighs on stocks as yields soar. RBA, RBNZ, FOMC and mid-terms in focus.

By | November 5, 2018

 

Friday was a wild ride in all markets following the US Jobs data which saw the US NFP rise by 250k, beating expectations of 190K, unemployment rate at 3.7%, average hourly earnings rose 0.2% mm, and 3.1%yy, the first time that it has been above 3% since 2009. The participation rate rose from 62.7% to 62.9%, indicating that more people are looking for work, a positive sign. The only dent in the data was the September figure, which was revised down from 134k to 118k, although this does little to keep the Fed on their stated path of another hike in December and possibly another 3-4 in 2019.

US stocks ended the day down around 0.5%-1.0%, with the S&P 500 down 17 points (0.6%), although on the week the index was up 2.4%. The US$, under pressure heading into the data, recovered some of its poise and finished with a bit of a recovery against all the major counterparts, but still below the highs seen last week. The DXY ended the week at 96.47, well above Friday’s low of 96.00 but below the week’s high of 97.20. In the bond market, yields soared on Friday, with the US10Y finishing at 3.218%, which should be supportive for the dollar heading into the new week, and even more impressive, the long bond (US30Y) ended the week at 3.461%, last seen in July 2014.

The metals were choppy in a tight range, while WTI continued its fall, down another 1.33%, heading to 6 month lows as the US softened its crackdown on Iranian exports and American supplies surged, easing concerns of an impending shortage.

The coming week will be busy, with the main event being the US midterm elections (Tue), which are pretty much likely to drive the direction for the whole week especially if there are big changes to either the upper/lower house. Trade negotiations between the US/China, Brexit and Italian Budget headlines  will also remain close to the surface in terms of traders focus, while in terms of economic data, other highlights will the RBA Meeting Interest Rate Decision (although note that it is Melbourne Cup Day and there will be a Statement only. No changes are expected), the RBNZ Meeting (Wed) and the FOMC (Thur), where there will also only be a statement and no change is expected ahead of the 25bp rise that has been written in for December.

Other Economic data highlights will include:                                                                         

Mon:  AIG Performance of Mfg Services Index, BOJ Minutes, TD Inflation, ANZ Job Ads, Caixin China Services PMI, EU Sentix Investor Confidence Survey, UK Services PMI, US Services PMI/Composite PMI, ISM Non-Mfg PMI

Tue: UK BRC Retail Sales, Japan Services PMI, RBNZ Inflation Expectations, RBA Interest Rate Decision/Statement, German Factory Orders, EU Services/Composite PMIs, JOLTS, Global Dairy Trade Index, API weekly Crude Oil Stock Inventory

Wed: AIG Performance of Mfg Construction Index, NZ Q3 Unemployment, German Industrial Production, ECB Non-Mfg PMI, EU Retail Sales, EIA weekly crude oil stock change, US Consumer Credit Change

Thur: RBNZ Meeting/Interest Rate Decision, Japan Current Account, Machinery Orders, Eco Watchers Survey, China Trade Balance, German Trade Balance, EU Economic Bulletin/Growth Forecasts, FOMC Meeting/Interest Rate Decision

Fri: Australian Home Loans/Investment Lending for Homes, China CPI, UK Manufacturing/Industrial Production, Provisional Q3 GDP, Trade Balance, US PPI, Wholesale Inventories, Michigan Consumer Sentiment Index

CURRENCIES
EURUSD: 1.1389
Res  1.1400  1.1420  1.1440
Sup  1.1370  1.1330  1.1350
USDJPY: 113.20
Res  113.45  113.75  114.00
Sup  112.95  112.75  112.45
GBPUSD: 1.2969
Res  1.3000  1.3040  1.3075
Sup  1.2950  1.2920  1.2885
USDCHF: 1.0035
Res  1.0045  1.0065  1.0095
Sup  1.0020  0.9990  0.9965
AUDUSD: 0.7197
Res  0.7210  0.7230  0.7250
Sup  0.7180  0.7160  0.7135
NZDUSD: 0.6646
Res  0.6665  0.6685  0.6700
Sup  0.6635  0.6620  0.6600
INDICES / COMMODITIES
S&P.fs: 2721
Res  2735  2750  2765
Sup  2715  2700  2685
DJ30.fs: 25220
Res  25305  25425  25595
Sup  25150  25040  24945
SPI200.fs: 5812
Res  5825  5850  5875
Sup  5795  5780  5765
XAUUSD: 1232
Res  1240  1245  1250
Sup  1230  1225  1220
XAGUSD: 14.74
Res  14.80  14.90  15.00
Sup  14.65  14.55  14.45
WTI.fs: 62.85
Res  63.35  63.95  64.60
Sup  62.60  61.90  61.00