US payrolls data released last Friday did little to alter perceptions that the Fed will tighten policy by this year, as odds of a hike in November fell, while that of December rose. Gold found some semblance of a support while crude oil pared some of last week’s gains. Asian stocks were mixed, as China reopened but markets in Japan, Hong Kong and Taiwan remain shut for holidays.
- September non-farm payrolls rose 156,000, lower than the expected 172,000; August’s figure was revised upwards to 167,000 from 151,000.
- The unemployment rate rose to 5.0%, from the 4.9% in July; wages grew 0.2% month-on-month, up from 0.1% in August but lower than economists’ estimates of 0.3%.
- Fed funds futures pricing data on Bloomberg reflect a 64% probability of a rate increase in December and a 17% probability in November, with the latter down from 24% prior to Friday.
- Fed Vice Chairman Stanley Fischer said job creation was continuing at a pace “fully consistent” with lower employment, but continued to contrast with a weak overall economic expansion.
- The S&P 500 Index slipped 0.3% last Friday, posting its first weekly decline in four; material stocks led decliners.
- The US dollar weakened, as the Bloomberg Dollar Spot Index fell 0.2% Friday after struggling to find direction following the jobs report release; the gauge managed to post a weekly advance of 1%.
- Treasury yields fell with a November-hike seemingly off the table, although traders saw little change in the outlook for policy tightening by December. The benchmark 10yr yield fell 1pb to 1.72%.
- Unemployment in September matched expectations and was unchanged from August at 7.0%.
- Net change in employment last month jumped by 67,200, from 26,200 in August and beating the consensus estimate of a 7,500 increase. The larger-than-expected increase was driven by a surge in part-time hiring, offsetting a slower pace of increment in full-time employment.
- Industrial production in August fell 0.4% month-on-month and rose 0.7% year-on-year, falling short of expectations of 0.1% and 1.3% respectively.
- Manufacturing production over the same period disappointed as well, rising 0.2% from a month earlier and 0.5% over the past year, lower than the projected 0.4% and 0.8% respectively.
- Treasurer Scott Morrison said he doesn’t see much appetite at RBA for further easing, adding that there’s no evidence that the property market is overvalued, even as Sydney home prices rose to new highs.
- John Chambers, chairman of S&P Global Ratings’ sovereign ratings committee said Australia has one of the weakest external positions of the 130 countries that the agency rates, adding that the country’s fiscal position is “not quite as strong as it used to be”.
- BOJ Governor Kuroda said over the weekend the central bank won’t be ending its QE program anytime soon, adding that the BOJ could push the 10yr JGB yield below zero if needed and may delay its 2% inflation forecast.
- Shanghai is introducing new measures to curb the recent surge in property prices, including increasing land supply and forbidding price rises in new home pre-sales without approval.
- Spot gold settled 0.9% lower at $1,257.08/Oz on Friday, recovering from earlier declines of as much as 2.1%. The precious metal was 0.6% higher earlier today at $1,264.35/Oz.
- Silver fell as well, closing 1.0% lower at $17.5463/Oz, but rebounded sharply off its 200-day moving average and key support of $17.10/Oz.
- Crude oil for November delivery failed to close above the $50/bbl-handle for the week, settling 1.3% lower at $49.81/bbl Friday.
- Declines were extended by a further 1.3% to %49.15/bbl earlier today, after Russia cast doubt on prospects for an OPEC deal this week to reduce output.
- Spot 1.3735
- USDSGD was little changed this morning, following its 0.7% weekly gain to 1.3732 last week.
- MAS is set to release its monetary statement on 14th Oct.
- DBS expects MAS to leave currency policy unchanged, according to a note to clients last Friday, adding that a change would only be considered if there was a marked deterioration in the global economy or a significant change to Singapore’s inflation outlook.
- Spot 0.7591
- AUDUSD gained as much as 0.4% to 0.7613 earlier today, on the back of a weaker US dollar over the weekend, although the currency pair continues to be capped around the resistance handle of 0.7600.
- Spot 1.3257
- USDCAD rose 0.7% to 1.3296 on Friday, to close at its highest level in more than 6 months.
- Gains were pared earlier this morning, following the release of a video over the weekend which showed presidential candidate Donald Trump taking about women in vulgar and degrading terms, prompting some top Republicans to withdraw their support for him.
- Spot 6.7100
- Onshore yuan tumbled the most in 4 months as China’s markets reopened after a week-long break; offshore weakened 0.1% to 6.7135 against the USD following its 0.5% weekly decline last week.
- The PBOC weakened its reference rate by 0.3% to 6.7008 earlier today.
- Spot 102.85
- USDJPY fell 0.2% to 102.81, following Friday’s 0.6% decline to close below the 103 handle.
- Spot 1.2399
- Sterling slipped 0.4% below the $1.2400 handle, following last Friday’s 2.1% decline, as the currency continues to face pressure amid worries of a “hard” Brexit.