Forexlive Americas FX news wrap: US jobs data weaker than expectations. Stock tank
Forex news for NY trading on December 7, 2018.
- US stocks struggle once again. Major indices down -2.2% to -3.05% on the day
- Brexit Parliamentary vote on Tuesday. ECB on Thursday
- Trump: Rex Tillerson was as "dumb as a rock"
- US consumer credit for October $25.384B vs $15.0B estimate
- US crude oil futures settle the week at $52.61
- Even more Bullard: Rates at neutral or above neutral today
- Huawei's Meng charged with conspiracy to defraud banks
- Trump is worried he's causing the drop in the stock market - report
- Canadian prosecutor says Meng arrest is for fraud; US warrant issued in August
- More from Bullard: There is no purpose in Fed inverting yield curve to preempt inflation
- Fed's Bullard: Repeats call to leave rates unchanged
- Baker Hughes US oil rig count 877 vs 887 prior
- Brainard Q&A: We are in vicinity of Fed's dual goals
- Fed's Brainard: Gradual rate hikes remain appropriate in 'near term'
- Most European indices end up but near the lows
- Atlanta Fed and NY Fed both lower Q4 US GDP forecasts to 2.4%
- CDU elects Annegret Kramp-Karrenbauer to succeed Merkel as party leader
- OPEC cuts production 800K bpd from October levels
- Bitcoin takes another run to the downside. New 2018 lows.
- Theresa May could face more resignations on Tuesday - report
- US wholesale inventories for October (F) +0.8% vs +0.7% expected
- December preliminary U Mich consumer sentiment 97.5 vs 97.0 expected
- Canada November employment change +94.1K vs +10.0K expected
- US November non-farm payroll +155K vs 198K expected
In other markets:
- Spot gold is up $10.28 or 0.83% at $1248.03
- WTI crude oil futures are up $.82 or 1.61% at $52.32
- Bitcoin on Coinbase tried to rally in the last few hours moving from a low of $3212 to $3550 but reversed back to $3338
In the US stock market, the major indices got trashed once again. European markets ended mostly higher but at the lows for the day.
For the week, below is a look at the percentage changes of the major indices. The Shanghai composite and the Austalia S&P/ASX were the only indices that eked out gains.
In the US debt market today, the yields moves lower with the yield curve inching up 0.4 bps (for 2-10). In this weeks trading the 2-5 spread inverted.
In the 10 year note sector today, yields were mixed with the more "safe countries" (i.e. Germany, UK (if you believe that) and France) yields moving higher marginally. The more risky countries had their yields move lower.
Today, was employment day. The US and Canada both released their reports. For Canada, the numbers were much stronger than expected. Employment change rose 94K vs 10K expected. The US numbers were lower than expectations. The NFP rose by 155K vs 198K expected. The prior months were revised a little lower. Wages, although lower MoM, came in as expected YoY.
What can be said about the report is the jobs market in the US is still positive and growing. That growth is at a slower rates (you expect that at full employment), but at 3.7% for the unemployment rate, you cannot really complain too much.
What the market did not really like is the trade anxiety in the US. WH Economic advisor Larry Kudlow spoke about the positives of the China/US relations, and then WH Trade advisor Peter Navarro did an interview where he raised the saber rattling about increasing tariffs to 25% if no trade deal with China was reached. Stocks did not like that, and they tumbled into the close.
Interestingly enough, after the stock close, Navarro came back on the CNBC and spoke a little softer, a little more kinder about prospects (sent out by The Boss - Navarro always calls him President Donald "T". Trump - who is reportedly glued to the stock market for the wrong reasons these days?). The problem is the markets are already closed and most traders have shut off the TV and the screens. Also, do we really know what the relationship really is between Pres. Trump and China's Xi? I am not sure. The market is not sure either. The rhetoric about a historic deal is increasingly falling on deaf ears - at least for now. That is clear from the price action.
In the forex market, the CAD is ending the session as the strongest (see chart above). The Canadian employment report was too strong, and the currency was hit lower this week making it easy for the longs in the pair to bail out (buy CAD).
The AUD was the weakest. If there is trade concerns, the AUD will not be a beneficiary. It wasn't
The USD ended the day mixed with gains vs the GBP, AUD and NZD and declines vs. the EUR, CAD, and CHF. The USDJPY ended near unchanged levels for the day.
For the week, the CHF was the strongest. With the stocks down, the CHF can attract safe haven flows and it seems that was indeed the case. The weakest was the AUD for the trade concerns cited above.
Next week the Brexit vote is the BIG event. The ECB has a rate decision (QE is to end at the end of the year). What do EU yields do after it is over? It is hard to ignore the stock market. The Fed decision is on December 18th. The 90-day clock is ticking with China.