Stock markets in Europe and North America have been eerily quiet so far this morning US index futures, the FTSE and the Dax are all down marginally, while Asia Pacific trading was mixed.
The US Dollar has bounced back slightly from Thursday's selloff with traders waiting for the next shoe to drop. The main factor driving currencies remains speculation on how many times the Fed will raise interest rates this year. Recently the US Dollar has been pricing in 4-5 rate hikes this year up from 2 before the election and 3 in the dot plot. Yesterday SF Fed President Williams indicated he would be comfortable with three. Today and tomorrow a number of this year's regional voters are speaking which could influence speculation.
The biggest event between now and the weekend, however, is the US nonfarm payrolls report. The street is expecting an increase of 175K jobs similar to November. The ADP report, however, indicated that payroll growth may have been stronger in November but the party didn’t carry through into December suggesting that there may not have been as much pent up demand for hiring as there was for getting into the stock market at the end of last year. I think we could see a payroll increase of 160 K and a 20K upward revision to the previous month.
For Canada the street is expecting a small decline again following a 10K increase last month. I think we’ll continue to see small increases in payrolls, and am looking for another 10K increase. Drilling into the data traders may be looking for signs of whether the recovery in oil prices is carrying through to oil patch hiring.
There are also a number of other significant announcements that could move the markets between now and the weekend including US and Canada trade balances, US factory orders and Canada PMI. All of these are likely to be viewed through the lens of what this could mean for monetary policy and currency markets. So far sentiment has been hawkish pricing in a Trump agenda to perfection that needs strong data and aggressively hawkish talk to support. More moderate Fed leanings, data disappointments, or more signs of pushback from other countries on trade could upset the apple cart.
There have been no major corporate reports overnight
Australia trade balance $1,243M vs street ($550M)
Germany retail sales 3.2% vs street 1.2%
Germany factory orders 3.0% vs street 3.6%
Norway industrial production 1.3% vs previous 0.7%
Eurozone retail sales 2.3% vs street 1.9%
Upcoming significant economic announcements include:
8:30 am EST US trade balance street ($45.4B)
8:30 am EST Canada trade balance street ($1.6B)
8:30 am EST US nonfarm payrolls street 175K vs previous 178K
8:30 am EST US private payrolls street 170K
8:30 am EST US average hourly earnings street 2.8% vs previous 2.5%
8:30 am EST US unemployment rate street 4.7%
8:30 am EST Canada employment change street (2K) vs previous 10K
8:30 am EST Canada full-time jobs previous (9K)
8:30 am EST Canada part-time jobs previous 19K
8:30 am EST Canada unemployment rate street 6.9%
10:00 am EST Canada Ivey PMI previous 56.8
10:00 am EST US factory orders street (2.3%)
11:15 am EST FOMC Evans speaking
1:00 pm EST FOMC Lacker speaking
3:30 pm EST FOMC Kaplan speaking
11:15 am EST Sat FOMC Kashkari speaking
11:15 am EST Sat FOMC Powell speaking
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