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US Stocks Heading Back To Record Ahead Of NFP, Soft Dollar

Published 02/06/2015, 01:07 AM
Updated 03/09/2019, 08:30 AM

US equities surged overnight on positive company news and rebound in oil price. Dow 30 rose 211.86 pts to close, or 1.2% to close at 17884.88 and is rather close to record high of 18103.45. Similarly, S&P 500 rose rose 21.01 pts, or 1.03% to close at 2062.52 and is heading back to record high of 2093.55. The dollar index, on the other hand, was mildly weaker as recent consolidation from 95.48 continued. The dollar index has been in range for two weeks and major focus today is whether the non-farm payroll report would trigger a breakout. Markets are expecting 233k growth in the job market in January, comparing to prior month's 252k. Unemployment rate is expected to be unchanged at 5.6%.

Other employment data for January so far were negative. ADP employment growth slowed to 213k in comparing to prior 253k. Employment component of ISM manufacturing dropped from 56.0 to 54.1. Employment component of ISM non-manufacturing dropped even steeper from 55.7 to 51.6. The four week moving average of initial jobless claims rose slightly by 2.25k to 292.75k. Overall, these leading indicators suggested there is little room for upside surprises in NFP today and we'd probably see the correction in dollar extends after the release.

Philadelphia Fed Charles Plosser said yesterday that the FOMC statement has become "too long". He said the statement is a bit like "Hotel California" where words checked in but never checked out. He urged a "thorough rewrite" in the statement.

In Eurozone, it's reported that ECB is prepared to provide as much as EUR 59.5b in emergency funding for Greek lenders. That was just a day after news that ECB suspended the Greek collateral waiver for regular lending facilities. Greek prime minister Yanis Varoufakis met his German counterpart Wolfgang Schaeuble in Berlin yesterday. Schaeuble was quoted saying they "agreed to disagree" regarding the ways to deal with Greece's debt crisis forward.

In Australia, RBA revised 2015 growth forecast to 1.75-2.75%, down from November projection of 2.00-3.00%. CPI projection for 2015 was lowered to 2.00-3.00%, down from prior forecast of 2.25-3.25%.Unemployment was projected to rise to 6.5%, comparing to prior forecast of 6.1%. Aussie is steady after the release as markets saw the revision as mild. In particular, some noted that if RBA is going to signal another rate cut, the inflation forecast of be lowered into the lower half of the target band. Swaps traders are pricing 37bps of further rate cut by RBA over the next 12 months.

Elsewhere, German will release industrial production in European session. Swiss will release foreign currency reserves, retail sales. UK will release trade balance. In US session, Canada will also release employment data and building permits.

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