FTSE -4 points at 7191
DAX -12 points at 11572
CAC -3 points at 4897
Euro Stoxx 50 -3 points at 3313
The US dollar pared gains against all G10 currencies after the aggressive sell-off in New York yesterday. The ADP employment report printed 153K in December, softer than 171K expected. ISM non-manufacturing stayed steady at 57.2 versus the consensus of 56.6. The final services PMI showed an expansion in the US’ services sector in December. Mixed data discouraged the Fed hawks, giving less reason to the Federal Reserve (Fed) meeting minutes released earlier this week, revealing concerns about a faster growth and inflation that could require a steeper rate normalization path in 2017.
The US labour data will stay in focus today. According to analysts, the US economy is expected to have added 178’000 new non-farm jobs in December, slightly higher than a month earlier, yet still below the 12-month average of 193’000. If this is the case, the average monthly NFP change in 2016 will decline to 190’000, versus 222’000 in 2016. The unemployment rate could have deteriorated to 4.7% at the end of 2016, from 4.6% in November. Any disappointment could hand the US dollar back to the bears.
The Aussie slid 0.20% against the US dollar in Sydney despite printing an unexpected trade surplus of AUD$ 1.24 billion in November versus -055bn expected and -1.12bn in October. Australia has a trade surplus for the first time since May 2014. The AUD/USD retreated to 0.7314, a touch higher than 0.7311 (minor 23.6% retracement on Jan 2nd to Jan 5th recovery). Solid trade data is expected to keep the AUD-bulls alert, as improved trade terms are what the Reserve Bank of Australia (RBA) needs to stay firm on its monetary policy stance. The key short-term support stands at 0.7283 (major 38.2% retrace), if broken, could send the pair in the short-term bearish consolidation zone and encourage a further slide toward the 0.7200 mark.
China is preparing for a potential trade war with the US. News that President-elect Donald Trump would raise the Chinese import tax up to 45% has not been welcomed by the world’s most populated nation. According to Bloomberg news, China prepares to fight back by subjecting US multinationals and companies that have large operations in China to similar constraints. People's Bank of China set theYuan's mid-point to the strongest since December 6th. Shanghai’s Composite (-0.15%) and Hang Seng (+0.20%) were mixed before the weekly closing bell.
Nikkei (-0.34%) and TOPIX (-0.15%) were offered in Tokyo, as the USD/JPY plunged to 115.07 for the first time since December 13th. The pair quickly rebounded past 116.00 mark, hinting at solid dip-buying interest approaching the 115.00 level. The key technical support stands at 114.56 (major 38.2% retracement on Nov 9th to Dec 14th post-Trump rise).
Gold retreated 0.33% from four-week highs. The EUR/USD failed to extend gains above the 50-day moving average (1.0600), while the GBP/USD saw decent resistance approaching its 50-day moving average (1.2450).
US equity futures traded flat to negative, while the European futures were mixed. The FTSE futures gained 0.08%, while the Euro Stoxx futures remained flat. Swiss equity futures (+0.52%) were well bid.
European markets are set for a soft open. FTSE is called 4 points lower at 7191 at the open.