Feb 3, 2017 - Market Update + US NFPs view

Short recap

China is back from holidays

POBC raised short term rates to reduce leverage and help CNY

JP stocks found support in BoJ buying bonds, thus weakening JPY

After 10-yr JP bonds yields touched 0.115%, the BoJ was active in buying 5-10yr bonds and targets 0% yield for 10-yr bonds

EU stocks started mixed waiting for NFPs clues

To watch DAX 11 500 and S&P 2245 levels on the downside

ChemChina close to getting antitrust approval from EU to acquire Syngenta for USD 43 bln

Bundesbank Chief Economist said there is no reason to reduce monetary stimulus

As the core inflation is still below target

Praet (ECB) – no sustained adjustment toward 2% inflation

Continued monetary stimulus necessary

Underlying inflation dynamics to remain subdue

Saw rebound in Italian bonds

Core bonds higher, yields lower after ECB rhetoric on QE

USDRUB was a big mover yesterday as US Treasury is looking to easy sanctions in the light of Trump wishing better relations with Russia

DXY steady as 10-yr US Trys yields float around 2.48%

Gold didn’t manage to hold gains above 1220; USD and rates the key

Needs a weekly close above to keep the momentum

Data

EZ: Markit PMI (Jan)

EZ: Retail Sales (Dec)

US: Charles Evans (Fed) speaking (1415 GMT)

US: Markit PMI (Jan)

US: Factory orders (Dec)

US: ISM Non-manufacturing

US NFPs

All in all after better ADP figures that are more or less in line with NFPs (statistically over the last year) expecting better numbers

Especially the hourly earnings will be closely watched as it will have direct inflation implications

Much better numbers may mean that Fed is late with its actions

Headline: exp. +210k vs 175k market expectation vs 156k previous

Participation rate: exp. 62.9% vs 62.7% previous

Average hourly earnings: exp. +0.2% or higher vs +0.3% market expectation vs +0.4% preious

Unemployment rate: exp. 4.7% vs 4.7% market expectation vs 4.7% previous

EURUSD – bearish signal?

Didn’t hold above 100 DMA at 1.0788

Didn’t break through 50% Fibo at 1.0820

DXY

Stayed above 100 DMA at 99.59

And above 61.8% Fibo at 99.26

GBP

For those who like to trade volatily after trigerring Art. 50

In the short term may look at selling GBP against EU currencies

Good luck Champs!

Mr Hawk

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