Here are the latest developments in global markets:
- FOREX: December’s preliminary inflation figures out of the Eurozone offered little to the euro as the price measures came in line with expectations on a yearly basis and slightly weaker relative to the month before. However, the region’s producer prices surprised to the upside, providing some support to the common currency, which consolidated near four-week highs versus the greenback. Euro/dollar parked at 1.2048 (-0.16%), while euro/yen climbed to a two-year high of 136.51 (+0.30%). Pound/dollar reversed gains from earlier in the day, retreating to 1.3540, with investors looking forward to fresh Brexit news before taking positions. The dollar index broke above the 92 key-level (+0.20%) ahead of the all-important NFP report, while against the yen it stretched towards 113.25 (+0.44%) amid risk-on sentiment. Dollar/loonie inched up to 1.2510.
- STOCKS: European stocks climbed higher on Friday, with eurozone shares being on track to post the best weekly performance since May as recent economic data strengthened investors optimism on the region’s economic outlook. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 were up by 0.56% and 0.61% on the day respectively at 1015 GMT with healthcare and consumer cyclicals leading the gains. The Swiss SMI jumped to an all-time high (+0.41%), while the British FTSE 100 posted another record high (+0.28%). The German DAX 30 extended its uptrend for the third day, surging by 1.0% on the back of rising auto and healthcare stocks. Futures on the main US indices were pointing to a positive open.
- COMMODITIES: Oil prices slipped even further during the European session as traders doubted whether the market will retain its bullish run given the threat from higher US production. WTI crude was trading 0.90% lower at $61.46 per barrel and Brent declined by 0.80% to $67.52. In other energy news, Saudi Arabia converted its giant oil company Aramco into a joint-stock company as of January 1, a key step to go through an initial public offering in 2018 in the domestic stock exchange. However, an international listing is also considered. Gold was down by 0.40% at $1,317.50 per ounce.
Day ahead: US & Canada report employment numbers
Looking ahead to the remainder of the day, the US will publish another patch of economic data that have the potential to shake the dollar.
Among the releases, the US government’s monthly nonfarm payrolls report, which tracks labor stats for both the private and public sectors, will be in focus. According to analysts, the report due at 1330 GMT is expected to show a job gain of 190,000 in December compared to 228,000 seen in the previous month, whilst the unemployment rate is forecasted to remain unchanged at a 17-year low of 4.1%. However, these numbers might come second in priority as the markets are eagerly awaiting for wage growth to pick up instead and therefore push up the slow-moving inflation towards the Fed’s 2.0% target. In November, average hourly earnings grew by 0.2% m/m and are anticipated to continue rising in December at the slightly faster pace of 0.3%. However, on a yearly basis wage growth is projected to stand flat at 2.5%.
Meanwhile, the Bureau of Economic analysis will give an update on trade balance figures, with the monthly trade deficit estimated to widen in November. At 1500 GMT factory orders and durable goods will come into view.
Traders will keep a close eye on the loonie as well, as Canadian labor data will be available along with the US employment report. Unlike the unemployment rate in the US, the Canadian one is anticipated to inch up by 0.1 percentage points to 6.0% in December. Regarding the number of job positions, those are anticipated to increase by 1,000, far below the previous mark of 79,500. Data on the trade balance and Ivey PMI readings will also gather some attention out of Canada.
In terms of policymakers’ appearances, Philadelphia Fed President Patrick Harker will be speaking on the US economic outlook at 1515 GMT and Cleveland Fed President Loretta Mester will be participating in a panel discussion titled “Coordinating Conventional and Unconventional Monetary Policies for Macroeconomic Stability” at 1730 GMT. Bank of England chief economist Andy Haldane will be chairing panel discussions at the Allied Social Sciences Association Annual Meeting; the relevant event begins at 1930 GMT.
In oil markets, the US Baker Hughes oil rig count due at 1800 GMT will be in focus.