Thu, Oct 06, 2022 @ 11:46 GMT
HomeAction InsightMarket OverviewSterling Lifted Mildly by Job Data, Markets Steady Overall

Sterling Lifted Mildly by Job Data, Markets Steady Overall

The financial markets are generally steady today, with stock and bond markets bounded in tight range. Most major currency pairs and crosses are also staying inside yesterday’s range. Swiss Franc is currently the firmer one, followed by Sterling is mildly firmer on solid employment data, but upside is capped. Meanwhile, New Zealand Dollar leads Australian lower, followed by Euro. The common currency is awaiting ECB rate decisions later this week, where new round of stimulus is widely expected.

Technically, Yen crosses start to lose upside momentum but there is no clear sign of topping yet. As noted before, we’re treating current rebound in USD/JPY, EUR/JPY and GBP/JPY as corrective. Thus, we’d continue to watch for topping signal ahead. Both Australian and Canadian Dollars are also losing some upside momentum. But further rise remains in favor in AUD/USD as long as 0.6807 minor support holds. Also, further decline is expected in USD/CAD as long as 1.3247 minor resistance holds.

In Europe, currently, FTSE is down -0.16%. DAX is up 0.28%. CAC is down -0.09%. German 10-year yield is up 0.0163 at -0.568. Earlier in Asia, Nikkei rose 0.35%. Hong Kong HSI rose 0.01%. China Shanghai SSE dropped -0.12%. Singapore Strait Times rose 0.30%. Japan 10-year JGB yield rose 0.0308 to -0.225.

UK unemployment rate dropped to 3.8%, wage growth solid

UK unemployment rate dropped to 3.8% in the three months to July, down from 3.9% and beat expectation of 3.9%. That’s also the lowest level since 1974. estimated unemployment rate for men was at 4.0%, for women at 3.6%. Wage growth was also solid. Average weekly earnings including bonus rose 4.0% 3moy, above expectation of 3.7% 3moy. Weekly earnings excluding bonus slowed to 3.8% 3moy, matched expectations.

EU Hogan: Trump has to see the error of his ways and abandon reckless behavior

Phil Hogan, EU’s Agriculture Commissioner, urged US President Donald Trump to see the “error” of his protectionist way when it comes to trade negotiation with EU. Hogan is expected the be appointed by incoming European Commission president, Ursula von der Leyen, to be the next EU Trade Commissioner starting November 1.

Hogan told Irish national broadcaster RTE that “Mr Trump certainly has indicated his clear preference for trade wars rather than trade agreements. If he keeps up this particular dynamic of protectionism, I expect that the European Union will continue to forge deals around the world,”

“But obviously we are going to do everything we possibly can to get Mr Trump to see the error of his ways and hopefully that he will be able to abandon some of the reckless behavior that we have seen from him in relation to his relationship with China and describing the European Union as a security risk.”

Germany in position to counter economic crisis with many, many billions of euros

Finance Minister Olaf Scholz told the Bundestag lower house of parliament that “it will be very important for us as the largest economy in the middle of the European Union, whether we are actually able to counteract a negative economic trend”.

And, “with the solid financial foundations we have today, we are in a position to counter an economic crisis with many, many billions of euros if one actually breaks out in Germany and Europe.” He added, “we’ll really do it then, it’s Keynesian economics, if you want to put it that way, it’s an active policy against the crisis.”

He also urged US and China to resolve their trade tension quickly. He told the parliament that “everywhere in the world companies are waiting to finally get a positive signal that things are moving in another direction again so they can finally invest.” And, “it is urgently necessary for the U.S. and China to reach an agreement in the trade dispute,” he added.

Australia NAB business condition and confidence dropped

Australia NAB Business Confidence dropped to 1 in August, down from 4. Business Condition dropped to 1, down from 3. Both readings are well below long-run averages. And the outcome suggests that “momentum in the business sector continues to weaken, with both confidence and conditions well below the levels seen in 2018”. NAB added that the results are “in line with the weak outcome for the private sector in the Q2 national accounts, prompting us to review our outlook for interest rates”.

Released earlier, Japan machine tools orders dropped -37.1% yoy in August. Japan M2 rose 2.4% yoy in August, matched expectations. China CPI was unchanged at 2.8% yoy in August, above expectations of 2.6% yoy. PPI dropped further to -0.8% yoy, down from -0.3% yoy, but beat expectations of -0.9% yoy.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2257; (P) 1.2321; (R1) 1.2407; More….

Intraday bias in GBP/USD remains mildly on the upside with 1.2233 minor support intact. Rebound from 1.1958 short term bottom is still in progress. Further rise would be seen to 38.2% retracement of 1.3381 to 1.1958 at 1.2502 first. Break will target 61.8% retracement at 1.2837. On the downside, however, break of 1.2233 minor support will turn bias back to the downside for 1.1958 support instead.

In the bigger picture, we’d remain cautious on medium term bottoming around 1.1946 (2016 low). Sustained trading above 55 week EMA (now at 1.2779) will extend the consolidation pattern from 1.1946 with another rise to 1.4376 resistance. Nevertheless, decisive break of 1.1946 will resume down trend from 2.1161 (2007 high) to 61.8% projection of 1.7190 to 1.1946 from 1.4376 at 1.1135.

Economic Indicators Update

GMT Ccy Events Actual Forecast Previous Revised
23:50 JPY Japan Money Stock M2+CD Y/Y Aug 2.40% 2.40% 2.40% 2.30%
01:30 CNY CPI Y/Y Aug 2.80% 2.60% 2.80%
01:30 CNY PPI Y/Y Aug -0.80% -0.90% -0.30%
01:30 AUD NAB Business Confidence Aug 1 4
01:30 AUD NAB Business Conditions Aug 1 2
06:00 JPY Machine Tool Orders Y/Y Aug P -37.10% -33.00%
08:30 GBP Jobless Claims Change Aug 28.2K 29.3K 28.0K 19.8K
08:30 GBP Claimant Count Rate Aug 3.30% 3.20%
08:30 GBP ILO Unemployment Rate 3Mths Jul 3.80% 3.90% 3.90%
08:30 GBP Average Weekly Earnings 3M/Y Jul 4.00% 3.70% 3.70% 3.80%
08:30 GBP Weekly Earnings ex Bonus 3M/Y Jul 3.80% 3.80% 3.90%
10:00 USD NFIB Small Business Optimism Aug 103.1 103.5 104.7
12:15 CAD Housing Starts Aug 227K 213K 222K
12:30 CAD Building Permits M/M Jul 3.00% 2.10% -3.70% -3.10%

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