Awaiting U.S. Payrolls

US stocks were looking down on Thursday ahead of crucial US payrolls data. US dollar index, a measure of a greenback’s value against a basket of six major currencies, lost 0.1% to 93.697 having rebounded already 2% from the fresh low of 91.919 hit this week – the lowest in 4 months. The payrolls data are expected to show the 202 thousand increase in jobs in April down from 215 thousand in March. After the weak ADP report investors are not optimistic about the payrolls. S&P 500 index lost 0.02% to 2,050.63 (see S&p 500 live chart) while Dow Jones industrial average rose 0.05% to 17,660.71. Today at 14:30 CEST the US April unemployment rate is anticipated, it is expected to remain unchanged at 5,0%. At the same time the change in non-farm and private payrolls in April will come out, the outlook is negative. Several other minor US labour market indicators for April are due at the same time. At 19:00 CEST Baker Hughes US rig count is expected, the latest number is 420.

European stocks steadied on Thursday on positive corporate earnings. The pan-European FTSEurofirst rose 0.2% after its 1.2% slump on Wednesday. The index has already lost 10% this year on worries about global economic slowdown and uncertainty with US monetary tightening and the overall bearish sentiment persists. Nevertheless, low prices start attracting bargain hunters.

Today, on Friday, European stocks opened with a negative bias ahead of US payrolls and on losses in mining and energy sectors. Britain’s FTSE 100 is losing 0.42% so far, Germany’s Dax 30 index is down 0.32% and France’s CAC40 is down 0.50%. The pan-European Stoxx 600 index is already 0.8% down following weak trading in Asia. EUR/USD is 0.17% up to 1.1424 having touched on Tuesday the 8-month high of 1.1616. Morgan Stanley (NYSE:MS) has revised up its EUR/USD forecast today from 1.06$ to 1.16$ emphasizing the ECB is running out of options to prevent further strengthening of single currency. Bank gave the same forecast about the yen and Bank of Japan with new expected USD/JPY rate of 103 instead of previous 110. Both Central Banks go on with their monetary easing programs which are boosting the fixed income products prices and are driving yields down. This morning the Markit construction and retail PMIs for April came out negative in Germany. No other significant data are expected today in Europe.

Japanese stocks retreated today on stronger yen which hurts corporate profits. Nikkei index lost 0.3% to 16,106.72 on Friday after three days of national holidays when the markets were closed and ended this week 3.4% lower. Broader Topix slid down 0.1% to 1,298.32 to end this short week 3.1% lower. While the stock markets were closed, the yen strengthened on Tuesday to a new 18-month high against the US dollar weighing further on exporters outlook. Today USD/JPY was traded at 106.92 having lost 0.31%. Moreover, negative corporate earnings added to investors concerns. Sharp stocks slumped 8.5% on the news it could have had a net loss of 300 billion yen ($2.80 billion) in a year to March 2016. Olympus Corp (OTC:OCPNY) fell 4.6% on disappointing profit outlook. On the other hand, Mitsubishi Motors Corp. (T:7211) rose 5.2% due to its strong April sales in North America.

Oil futures prices are edging lower as investors have played off the news on wildfires in Canada’s oil sands region that disrupted oil deliveries. As a result, Brent oil prices lost 0.6% to $44.73 a barrel.

Gold, being an asset typically sensitive to US dollar moves and Fed monetary policy, rose 4$ to $1,281 an ounce as US dollar was looking down ahead of US jobs data. For the first time in more than a year, gold has climbed above the level of 1,300$ an ounce on Monday – the day, when US dollar hit a 18-month low against the Japanese yen.