The euro retreated with stocks, while bonds rose, amid concern the failure of Italy’s referendum on constitutional reform will destabilize the country and embolden nationalist movements across the region. The US dollar strengthened, while gold declined, as investors chose to seek haven in the greenback instead of the precious metal.
- US November non-farm payrolls increased 178,000, from a revised-lower October reading of 142,000, and lower the median estimate of 180,000.
- The unemployment rate fell to 4.6% – the lowest level in 9 years, lower the consensus forecast of 4.9%. The labor force participation rate fell to 62.7% from 62.8%, as some 226,000 people dropped out of the labor force.
- Average hourly earnings slipped 0.1% month-on-month, faring worse than the prior 0.4% gain and expected 0.2% rise.
- US government bond yields fell the most in 3 months last Friday; the benchmark 10yr Treasury yield sank 5bps to 2.40% following its rise on Thursday to the highest since June 2015.
- Despite employment data slightly disappointing, market expectation for a hike next week remains at 100%, according to pricing data on Bloomberg.
- The US dollar was broadly stronger during Asia’s open today, following news late Sunday that Italian PM Renzi will resign after suffering a loss in a reforms referendum. The Bloomberg Dollar Spot Index was 0.6% higher earlier today, following last Friday’s 0.3% drop.
- The S&P 500 Index was largely unchanged last Friday, as weakness in financials offset gains in utilities and real estate stocks.
- Canada’s unemployment rate fell for the first time in 5 months in November, improving from the prior figure of 7.0% to 6.8%, and beating consensus estimates of 7.0%.
- 10,700 jobs were added in November, a fourth straight monthly gain, and well above economists’ forecast of a 15,000 drop. Part-time employment rose by 19,400 while 8,700 full-time jobs were lost.
- Italian Prime Minister Matteo Renzi quit in the early hours of Monday after losing a referendum – 40% to 60%, which he’d called to push through constitutional changes, threatening renewed political and financial turmoil for Europe. The news sparked a sell-off in the euro, with EURUSD falling to its lowest since March 2015.
- Anti-Brexit Liberal Democrats gained a UK parliamentary seat in a by-election, a result that may complicate Prime Minister Theresa May’s efforts to begin the process of leaving the EU early next year. The pound rallied.
- The UK government has published its infrastructure-investment pipeline, detailing a record 500 billion pounds of projects scheduled to be undertaken in the coming years. Government investment is behind about 40% of the pipeline, and projects include the Thames Tideway Tunnel, smart meters and upgrading of the A14 highway in eastern England.
- Donald Trump took on the Chinese government via social media on Sunday, rejecting criticism of his decision to take a phone call form Taiwan’s president at the risk of triggering a backlash from Beijing. The US president-elect tweeted that he wouldn’t be told by China who he should or shouldn’t talk to, and reiterated some of the grievances about China used in his winning presidential campaign.
- November Caixin PMI Services rose to 53.1, from 52.4 prior; Composite PMI remained steady at 52.9.
- The kiwi weakened as Prime Minister John Key said he’ll stand down, citing family reasons, and backed Finance Minister Bill English to succeed him.
- A gauge of inflation tracked by the Melbourne Institute in November rose 0.1% month-on-month and 1.5% year-on-year; prior readings came in at 0.2% and 1.5% respectively.
- Spot gold declined 0.5% earlier today to $1,171.70/Oz, reversing an earlier surge, as investors sought haven in the US dollar, rather than the precious metal following Italian PM Renzi’s resignation announcement yesterday.
- Investors are continuing to exit gold-backed ETFs, with holdings contracting for a 16th straight day as of last Friday, the longest stretch since Mar 2015.
- With interest rates in the US widely-predicted to rise next week, the precious metal could face further downward pressure. Below the $1,170/Oz support, the next level comes in at $1,145/Oz.
- The previous support of $1,200/Oz now acts as a key point of resistance.
- Spot silver bounced off the $17/Oz handle earlier today, as the metal fell 0.8% to $16.6106/Oz, paring some of its gains from Friday’s 2.6% rally.
- Crude oil for January delivery was 1.2% lower today at $51.04/bbl, following last week’s 12.2% surge.
- Oil retreated from its highest-close in 16 months as US producers continued to boost drilling after OPEC agreed to reduce output last week. According to data from Baker Hughes Inc., drillers added rigs for a fifth straight week to the most since January.
- Spot 1.4263
- USDSGD bounced off the 1.4200 support, gaining 0.5% to 1.4263 earlier and paring some of Friday’s declines.
- USDSGD fell 0.3% to 1.4247, wiping out yesterday’s gains, ahead of US jobs data due later tonight.
- The 1.4200 handle continues to provide decent support, while the next point of resistance lies above at 1.4444, the currency pair’s year-to-date high.
- Spot 0.7430
- AUDUSD slid 0.6% to 0.7413 today, following news of New Zealand PM John Key’s decision to step down.
- Support levels below come in at 0.7259 and 0.7145, while the key resistance point lies at the 0.7500 handle.
- Spot 1.3343
- USDCAD was 0.5% higher on the back of a stronger US dollar earlier today.
- Support levels below come in at 1.3265 and 1.3000, while the resistance at 1.3589 remains.
- Spot 6.8847
- The PBOC weakened its fixing this morning, 0.11% lower to 6.8970 to the US dollar.
- USDCNH rebounded from a 2-week low reached last Friday, gaining 0.3% to 6.8893 earlier today.
- Spot 113.57
- USDJPY was relatively unchanged, reversing an earlier 0.6% decline.
- The currency pair has struggled to stay above 114.50, its current resistance level. A close above 114.50 may result in the pair moving higher to its next resistance of 116.00.
- Support is likely to be found at the 111.00 handle.
- Spot 1.2687
- GBPUSD ended Friday at its highest level in 2 months, gaining 1.1% to 1.2729. The currency pair pared some of its gains this morning though, following news that voters voted “No” in the Italian referendum, as weakness in the euro spilled over into sterling.
- On a longer-term basis, the 1.2300 handle remains a key support level, while 1.2800 acts as an important resistance handle.