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NFP and Wage Growth Distract the Markets and the USD?

Bob Mason
Can U.S NFP and wage growth numbers come to the market’s rescue? Some will be hoping for soft numbers to dial back expectations of a December hike.

Earlier in the Day:

Economic data was on the lighter side through the Asian session this morning, with key stats limited to October household spending figures out of Japan.

For the Japanese Yen, household spending fell by 0.3% year-on-year in October, which was worse than a forecasted 1.2% rise, following September’s 1.6% fall. Month on-month, household spending jumped by 1.8%, coming in ahead of a forecasted 1.4% rise and a 4.5% slide in September.

The Japanese Yen moved from ¥112.721 to ¥112.706 against the U.S Dollar upon release of the figures, before easing to ¥112.71 at the time of writing, down just 0.03% for the session.

Elsewhere, the Aussie Dollar was down 0.19% to $0.7222, while the Kiwi Dollar managed to hold its ground, up 0.04% to $0.6880 at the time of writing, the rebound in the U.S equity markets on Thursday easing market panic early on.

In the Asian equity markets, the Nikkei was up 0.20% at the time of writing, the Yen’s move to ¥112 levels limiting the upside, while the ASX200 and CSI300 were up 0.39% and by 0.36% respective, with the Hang Seng up 0.31% as investors trade carefully following Hua Wei CFO’s arrest on Thursday.

The Day Ahead:

For the EUR, economic data scheduled for release through the day includes October industrial production numbers out of Germany and 3rd estimate GDP numbers for the 3rd quarter out of the Eurozone.

Outside the numbers, we can expect chatter on the Italian coalition government’s budget to provide some direction, news of the PM being willing to make amendments to avoid sanctions providing some EUR support alongside the weaker Greenback.

At the time of writing, the EUR was up flat at $1.1374, with today’s stats the key driver through the day.

For the Pound, economic data is limited to house price figures that are unlikely to have an impact on the Pound as the markets continue to focus on Parliament and the Brexit deal.

Theresa May has almost made it through the week, but with talk of another Referendum gathering momentum, those looking to remain within the EU have even more incentive to vote against the deal on Tuesday, assuming that there is no delay.

If the deal is not passed, a number of outcomes are possible and, while some are quite dire for the Pound, a 2nd EU Referendum could restore order for the Establishment and ultimately the Pound. The negatives would be a vote of no confidence, which one would expect to be inevitable should the deal be rejected and we can also expect another General Election to be called, which would raise the prospects of the Labour Party returning to office.

The big question will be whether Britain will be allowed to leave the EU without a deal or will it ultimately end in a complete reversal of the last 2 years of almost chaos.

At the time of writing, the Pound was down 0.06% at $1.2773, with Brexit chatter continuing to be the key driver through the day.

Across the Pond, it’s a big day for the Dollar, with key stats scheduled for release including November’s labour market data, with focus being on the nonfarm payroll and wage growth figures and prelim consumer sentiment numbers for December.

Outside the stats, we can expect trade war chatter to continue to influence, with Hua Wei CFO and Deputy Chair Meng Wanzhou’s arrest in Canada throwing into doubt any hopes of the 90-day trade war truce actually lasting the distance.

On the policy front, FOMC member Brainard is scheduled to speak, but barring anything particularly out of the box, focus will likely remain on the stats and chatter from Beijing and the Oval Office.

At the time of writing, the Dollar Spot Index was down 0.01 to 96.799.

For the Loonie, economic data scheduled for release through the day is limited to November employment figures that could see the Loonie slide back to $1.34 levels should the figures disappoint, falling crude oil prices and a dovish central bank doing the Loonie few favours amidst the current risk aversion.

The Loonie was down 0.07% to C$1.3393 against the U.S Dollar at the time of writing.

This article was originally posted on FX Empire