FTSE +27 points at 7237
DAX +36 points at 11635
CAC +13 points at 4922
Euro Stoxx +10 points at 3331
The US jobs data printed a mixed image on Friday. The US economy added 156’000 new nonfarm jobs in December, less than 178’000 that the market expected, yet the wages growth has been strong, +0.4% month-on-month, outweighing last month’s 0.1%m/m contraction and pulling the year-on-year wage growth to 2.9%. The unemployment rate deteriorated to 4.7% as expected, while the participation rate remained steady at 62.7%. San Francisco President John Williams had an interesting approach, as he said that the December jobs report underlined that the US economy is close to full employment, therefore there is no need for fiscal stimulus. He kept his forecast for three rate hikes in 2017.
Disappointing at first sight, the US jobs data triggered the Federal Reserve (Fed) doves. The S&P 500 legged up to $2282, as the Dow Jones tested $20’000 hurdle. The EUR/USD shortly spiked to 1.0622, the GBP/USD advanced to 1.2432. However, the USD-bulls came back rapidly in charge and pushed the US dollar higher into the closing bell; the stocks came off fresh all-time highs.
Although the US dollar closed lower against the euro and the yen for the third consecutive week, the USD appetite was back at the week’s open in Asia. The US dollar gained against all of its G10 peers, except the AUD (+0.05%). GBP (-0.79%) and JPY (0.42%) lead losses against the greenback.
The GBP/USD plunged to 1.2181 on the back of Brexit concerns. Prime Minister Theresa May said the UK could leave the single market to regain control over immigration. Details will follow in the coming weeks, while the selling pressures on the pound will certainly stay until more details are revealed. The key short-term support is eyed at 1.2080 (post-Oct 7th flash crash support), before the 1.2000 re-enters the radar.
Japan was closed. Hang Seng (+0.23%) and Shanghai Composite (+0.41%) gained slightly. The Yuan extended losses (-0.15%) against the US dollar. Although People’s Bank of China (PBoC) adviser Fan Gang said that further measures to temper capital outflows are likely unnecessary, investors were left unconvinced that pressures would ease. Foreign reserves in China fell to $3010.5 billion in December from $3051.6 billion.
The yuan remains under pressure, although shorting the yuan remains quite expensive. China’s inflation data due on Tuesday could hint at speedier inflation, especially on the producers’ camp, and hopefully revive the PBoC hawks and reinforce the yuan. For the moment, the USD/CNY is back to 6.9341 from 6.8770 last week, suggesting that the PBoC’s efforts to strengthen the currency may have remained insufficient.
The ASX 200 gained 0.90% and the AUD/USD firmed on news that Australia’s revenues from resource and energy exports could reach a record high of AU$203.9 in 2016/2017, according to Department of Industry and Science. There is solid AUD/USD resistance at 0.7355, if surpassed, could pave the way for a further rise to 0.7370 (50-day moving average) and 0.7385 (major 61.8$% retracement on Dec 13th to Dec 22nd decline).
WTI remained flat at $53.66/53.83, gold traded in a $5 range of $1172/1177.
US and European equity futures were in demand. The SMI (+0.45%) and FTSE futures (+0.43%) outperformed, DAX futures (+0.18%) firmed, hinting at a positive Monday open.
The FTSE is called 20 points higher