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Into the end of the week, this weak sentiment could moderate slightly with mixed returns expected for Friday.
The highlight for the overnight session had been the ECB meeting where monetary policy was kept unchanged as expected. The focus had instead been on ECB president Mario Draghi’s speech which was interpreted as being less dovish, sending the EUR/USD up. With the high weightage of EUR in the USD index, we saw the index itself pulling back slightly to end the climb since the start of the week. That said, the USD strength had nevertheless been apparent in the USD/JPY pair. USD/JPY marched on with a steady climb despite the higher than expected initial jobless claims count overnight.
The forward looking market had likely placed its focus ahead to the upcoming February non-farm payrolls release instead. Strong expectations are in place for the data to come in near the top end of the recent range with Bloomberg’s market consensus for the figure rising to 200k when last checked. Should the data beat expectations, we may find the USD with further upsides to print. Two consecutive months of strong labour data figures may see the Fed may with stronger push to shift away from the accommodative stance.
US equity markets meanwhile reflected a state of consolidation ahead of the key payrolls data. After declining for three consecutive sessions, the S&P 500 index saw near neutral changes on Thursday. Financials had managed to eke out some gains once again in the lead up to the Fed FOMC meeting, which the market reckons with almost certainty that would entail an interest rate hike. This would be a sector to continue to watch for in the Fed’s decision and summary of economic projections report next week.
Asian markets clocked substantial losses on Thursday, weighed primarily by weak oil prices. The sustained dip in oil prices, where WTI futures was seen sliding past the key $50.00 support, reflects the fragility of sentiment for oil bulls in the face of the supply glut. Opening calls finds mixed leads for the region which could take after overnight markets and hold steady before the NFP data. Early movers in the region finds risk off sentiment apparent in the South Korea market with President Park’s impeachment verdict on the line. Meanwhile the Nikkei 225 was last seen cheering on the USD/JPY uptick.
No major data will be due from Asia on Friday, though the local Singapore market is expecting January retail sales data. Look ahead to US NFP data, Baker Hughes rig count today.
Yesterday: S&P 500 +0.08%; DJIA +0.01%; DAX +0.09%; FTSE -0.27%