Positive start for Asia markets

Trade optimism coupled with the latest non-farm payrolls surprise can be seen aiding US futures and Asia markets on a better footing going into a fresh week focused upon data.

US dollar weakness theme

Sustaining from the previous week, the greenback weakness remains a prevalent theme after seeing the US Dollar Index, measured against six major currencies, print a 10-day low on Friday. This is also reflective of the market trends we have been seeing whereby mixed US data and the improvement in geopolitical risk sentiment continued to exert the pressure on the US dollar.

The highly anticipated non-farm payrolls numbers were noted to have arrived at 128k against the 89k forecast while the unemployment rate and average hourly earnings came in largely in line with consensus. In comparison, the October ISM manufacturing PMI reading had disappointed at 48.3 against the 48.9 consensus, marking a third consecutive month in contraction territory. Despite the manufacturing disappointment, it appears that the market had largely taken well to the positive payrolls reading between concerns of the GM strike impact and the impact of the ongoing trade uncertainties upon the labour market. Wall Street broadly rose, and this is likewise one to aid with Asia markets.

Zooming back to the greenback performance, one can see that prices are again testing support for the US dollar index. Over and above the data implications, the risk sentiment factor may be one to continue seeing suppressed US dollar trend. Over the weekend, President Donald Trump and US commerce secretary Wilbur Ross were noted to have delivered optimistic comments on the US-China phase one deal, going as far as touching on licenses expected ‘very shortly’ for American companies to sell components to Huawei, certainly a sensitive topic at heart. While the details of the US-China ‘phase one’ deal signing meeting have not been confirmed, it appears that there had been keen interests to build up the positive rhetoric until then, one likely to keep the USD strength capped.

Asia open

Against the backdrop of the positive US-China trade rhetoric and the payrolls surprise, Asia markets have commenced the day on a positive note. A relatively light start to the week appears to be the case with data few and far between, but expect the focus to remain on data after the slew of central bank meetings last week, particularly the Fed, alluded to the data-centric focus.

Friday: S&P 500 +0.97%; DJIA +1.11%; DAX +0.73%; FTSE +0.75%

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