Markets calm ahead of US non-farm payrolls

Equities consolidate late gains

US indices were marginally in the red in the Asian morning as investors await the September US non-farm payroll report. Wall Street indices slid between 0.11% and 0.18% with the NAS100 index the underperformer. Hong Kong shares fell 0.73% after it was announced yesterday that the region will ban the wearing of face masks at demonstrations. The only bright spot for Hong Kong in recent days/weeks came from the Nikkei manufacturing PMI reading for September, which improved to 41.4 from 40.8 the previous month.

US30USD Daily Chart

Source: OANDA fxTrade

Aussie shrugs off retail sales data

The Australian dollar was mildly firmer this morning, mostly due to further US dollar slippage, as the country’s retail sales for August missed estimates. Sales grew 0.4% m/m, up from July’s 0% reading but not quite matching economists’ forecast of a 0.5% gain.

In its Financial Stability Review, the RBA said Australian households are well placed to service debt levels while the risks from falling house prices have reduced, but are still there. The tone of the review added to the risk-on mood for the Aussie.

AUD/USD rose 0.14% to 0.6751, rising for a third day (a feat it hasn’t achieved since the first half of September). The 55-day moving average is lurking at 0.6805, which has capped prices for more than two weeks.

AUD/USD Daily Chart

Source: OANDA fxTrade

Are we in for a disappointment?

Analysts’ forecasts suggest the US economy added 145,000 jobs in September, more than the 130,000 posted in August but below the six-month moving average of 150,000. Given the disappointing data from the private ADP employment report on Wednesday and unimpressive employment indices in the recent PMI releases, there is perhaps a risk that the downside may be vulnerable.

The employment index in the ISM’s manufacturing PMI fell to 46.3, the lowest reading since January 2016, while the equivalent index in the services PMI slumped to 50.4, the weakest in more than five years. These components add fuel to the argument that today’s numbers could be disappointing.

Job Weakness is the straw that will break the Fed’s Mid-Cycle Adjustment Back

What will Fed speakers have to say?

Hot on the heels of the widely anticipated US non-farm payroll report, there’s no doubt that, if permitted, the audiences will be clamouring for some “instant reaction” from the various FOMC speakers scheduled for later today. Rosengren is due to speak just as the data will be released, while Powell, Brainard, George and Quarles are scheduled later. Canada’s trade data for August and the Ivey PMI reading for September will undoubtedly be overshadowed by the US employment report.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

Gold – In corrective mode? (video)

Source: MarketPulse

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