- European bourses are mixed whilst US equity futures trade tentatively on either side of the unchanged mark ahead of today’s US NFP report.
- Dollar is rangebound, GBP and JPY are attempting to claw back some of their recent losses.
- USTs are flat whilst Bunds slip extending on this week’s pressure; Gilts are also on the backfoot fuelled by hawkish-leaning commentary from BoE’s Pill.
- Crude continued to hold an upward bias as focus remains on the geopolitical tensions, XAU/base metals hold a mild upward bias.
- Looking ahead, highlights include US NFP, Canadian Ivey PMI, Comments from Fed’s Williams, Goolsbee, ECB’s Elderson.
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EUROPEAN TRADE
EQUITIES
- European bourses, Stoxx 600 (+0.3%) began the session on a modestly weaker footing, but has edged off lows as the morning progressed. Trade still remains tentative in the run-up to today's key US NFP report.
- European sectors are mostly firmer trade with no real theme or bias. Energy resides at the top of the chart. To the downside, very mild losses seen in Technology and Media, although the breadth of the losses are modest.
- US Equity Futures (ES U/C, NQ +0.1%, RTY -0.1%) are trading very modestly above the unchanged mark, with traders very mindful of the looming US NFP report.
- DoJ and SEC back class action alleging NVIDIA (NVDA) hid crypto mining revenue, according to Cointelegraph.
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FX
- USD is mixed/flat vs. peers in the run-up to today's eagerly anticipated NFP print. A strong release could see DXY make a more sustained breach of the 102 mark after venturing as high as 102.09 on Thursday.
- EUR is flat vs. the USD after being softer vs. the USD for the past five sessions on account of a dovish ECB repricing and as Powell guided markets towards a 25bps (as opposed to a 50bps) cut earlier in the week. For now, EUR/USD remains within yesterday's 1.1008-49 range.
- GBP is a touch firmer vs. the USD after what was a particularly bruising session yesterday on account of comments from BoE Governor Bailey that the Bank could begin cutting rates at a faster pace. Cable has picked itself up from a 1.3093 low yesterday to a 1.3167 peak today but this is a far cry from the 1.3270 high seen on Thursday.
- JPY is attempting to claw back some losses vs. the USD which were triggered earlier in the week by comments from Japanese PM Ishiba, downplaying the possibility of a near-term rate cut. USD/JPY ventured as high as 147.23 but has since returned to a 146 handle.
- AUD/USD is steady vs. the USD but in close proximity to yesterday's low that was triggered by the hot ISM services print which dragged the pair lower to a 0.6829 base vs. the 0.6942 YTD peak printed earlier in the week.
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FIXED INCOME
- USTs are flat, in contrast to European peers in what appears to be an attempt to claw back some of yesterday's ISM services-induced losses which dragged the Dec'24 contract to a 113.28+ low vs. the 114.14+ high seen earlier in the session. All focus will be on today's US NFP report.
- Bunds have extended the pullback seen since Tuesday which saw the Dec'24 10yr print a fresh contract high at 136.20. EZ-specifics has been light so focus will be on the US employment data. The German 10yr yield has continued its upside and has been as high as 2.174% vs. the 2.011% multi-month low printed earlier in the week.
- Gilts kicked the session off on the backfoot inline with European paper and a reversal of yesterday's upside that was driven by dovish comments from BoE Governor Bailey. Downside for the UK 10yr was added to by comments from BoE Chief Economist Pill who took a more hawkish stance than his boss.
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COMMODITIES
- Crude is holding an upward bias against the backdrop of heightened geopolitics heading into the weekend, with Israel's response yet to come. Brent'Dec resides near its weekly best in a USD 77.39-78.42/bbl range.
- Mixed trade across precious metals ahead of the US jobs report but spot gold holds a mild upward bias on the back of the aforementioned geopolitics. Spot gold briefly topped yesterday's high (USD 2,663/oz).
- Base metals hold a mild upward bias but largely treading water in a tentative market awaiting the US jobs report. Mainland Chinese markets remained closed overnight for Golden Week holiday.
- UAE's ADNOC set Nov Murban crude OSP at USD 73.41/bbl (prev. USD 77.94/bbl)
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NOTABLE DATA RECAP
- French Industrial Output MM (Aug) 1.4% vs. Exp. 0.2% (Prev. -0.5%, Rev. 0.2%)
- Spanish Ind Output Cal Adj YY (Aug) -0.1% vs. Exp. 0.1% (Prev. -0.4%)
- German HCOB Construction PMI (Sep) 41.7 (Prev. 38.9)
- Italian HCOB Construction PMI (Sep) 47.8 (Prev. 46.6)
- EU HCOB Construction PMI (Sep) 42.1 (Prev. 41.4)
- French HCOB Construction PMI (Sep) 37.9 (Prev. 40.1)
- Italy Q2 GDP revised to 0.6% YY (prev. 0.9%), via ISTAT
NOTABLE EUROPEAN HEADLINES
- "EU countries approve duties (up to 35% [additional tariffs]) on unfairly subsidized Chinese electric cars, despite Germany's last-minute opposition", according to Politico (as expected)
- BoE's Chief Economist Pill said ample reason for caution in assessing the dissipation of inflation persistence; need for such caution points to a gradual withdrawal of monetary policy restrictions. Further cuts in the Bank Rate remain in prospect but it will be important to guard against the risk of cutting rates either too far or too fast. He remains concerned about the possibility of structural changes sustaining more lasting inflationary pressures. "does not think level of interest rates is having more than a marginal impact on UK business environment"
NOTABLE US HEADLINES
- Port operators offered 62% pay increases to end the dockworkers' strike with the condition that workers return to work and agree to efficiency gains, according to WSJ. ILA announced shortly after it reached a tentative agreement with USMX on wages and that all current job actions will cease and all work covered by the master contract will resume with immediate effect.
- Former US President Obama is to campaign for Democratic candidate and VP Harris in the run-up to the election, according to Washington Post.
GEOPOLITICS
- Iranian Supreme leader Khamenei said will strike again if necessary. Adds "we will not delay nor rush to respond to Israel".
- Israeli army calls on residents of 20 towns in southern Lebanon to evacuate, according to Sky News Arabia
- Hezbollah announces targeting of northern Haifa with a rocket barrage, according to Sky News Arabia.
- Israel's military called for the immediate evacuation of specific buildings in Beirut's southern suburbs and multiple Israeli raids were then reported in the area, while Israel also conducted a strike on the outside perimeter of Beirut Airport. Furthermore, Israel's Channel 14 reported that Hezbollah's Executive Council head Hashem Safieddine was the target of Israel's attack in Beirut and Israel's military said it killed Zahi Yasser Abdel Razak Ofi who is the head of the Hamas network in the West Bank's Tulkarm.
OTHER
- Ukraine's military said it hit fuel storage facility in Russia's Voronezh region
- Ukrainian drone strikes targeted a fuel depot in the Russian town of Anna in Voronezh Oblast, while the Russian emergencies ministry later announced that a fuel depot was on fire in Russia's Perm region.
- North Korean leader Kim warned North Korea will use nuclear weapons if South Korea and the US use force, while he said enemies' threats will not take away North Korea's nuclear weapons and it has irreversibly secured nuclear power, as well as the system and function for using it, according to KCNA.
CRYPTO
- Bitcoin is modestly firmer and climbs back above USD 61.5k, whilst Ethereum edges past USD 2.3k.
APAC TRADE
- APAC stocks traded mixed amid light pertinent catalysts for the region heading into the weekend and the latest US NFP report.
- ASX 200 fell with almost all sectors in the red and miners leading the retreat although energy bucked the trend after the oil surge.
- Nikkei 225 traded higher owing to recent currency weakness and after PM Ishiba instructed to compile a comprehensive economic package, although the gains were limited in the absence of any major macro drivers or key data releases.
- Hang Seng outperformed in a rebound from yesterday's profit-taking with the advances spearheaded by tech strength and the energy sector was also boosted by the recent surge in oil prices.
NOTABLE ASIA-PAC HEADLINES
- Japanese Chief Cabinet Secretary Hayashi said PM Ishiba instructed to compile a comprehensive economic package, while Hayashi added that they will compile a supplementary budget after the lower house election.
- Germany will reportedly vote against EU tariffs on Chinese EVs, according to sources via Reuters.
