Morning update: traders cautious ahead of US jobs report

All eyes will be on the US non-farm payrolls report at 1.30pm.

US flag
Source: Bloomberg

Equity markets in Europe are broadly higher, despite some having had a negative start thanks to the decline in Asia overnight. Traders are cautious ahead of the non-farm payrolls report at lunchtime. Stock markets are trying to regain the losses that were incurred at the beginning of the week, but the recovery looks shaky. While the FTSE is below 6000, traders will be hesitant to buy. The DAX needs to clear 9600 before more confidence will come into the market. If the France 40 remains sub 4300, a move to the downside is possible. 

The Dollar Basket has dropped 2.94% so far this week and is headed for its worst week since 2009. The slowdown in China has forced the Federal Reserve to use more dovish language, and the Fed Funds futures market is pointing to no interest rate hikes in 2016.

GBP/USD and EUR/USD have pulled back this morning as traders liquidate their long positions ahead of the jobs report. Both currency pairs have gained ground against the dollar since January and the short-term trend still holds. Buy-the-dip has been the favored strategy recently, but a strong set of US data could trigger dollar buying.

The soft dollar is helping keep gold in its upward trend, and pullbacks could see more buyers enter into the fold. Gold bulls will be keeping an eye on $1170 (resistance on August’s ‘Black Monday’). Oil is also being assisted by the weak dollar, and both US light crude and Brent have been pushing higher this morning. While Brent holds above $34, the outlook is bullish and the bulls will be looking to break $36. While US crude stays north of $32, the outlook will be positive, and buyers will be looking towards $34. 

FTSE 100 risers and fallers (as of 10am)

Company % change Index points
Anglo American +5.86 +0.87
Standard Chartered +2.35 +1.07
GKN +2.3 +0.40
easyJet +2.02 +0.29
Glencore +1.93 +0.86

 

Company % change Index points
Wordplay Group -1.5 -0.18
BAE Systems -1.31 -0.78
Rio Tinto -1.29 -1.14
Royal Mail -1.02 -0.16
National Grid -0.99 -1.41

The day ahead

Corporate reporting:
US: Moody's Corp

Economic data:
1.30pm – US non-farm payrolls: exp 190,000 vs 292,000. US unemployment: exp 5%, prior 5%. US average hourly earnings MoM: exp 0.3%, prior 0.0%. US average hourly earnings YoY: exp 2.2%, prior 2.5%.

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