Asian shares win reprieve on ECB signal, U.S. jobs next focus

Good morning,

- Fed's Kocherlakota: ''China growth uncertainty a source of volatility. Market turmoil hasn't changed his policy outlook. Canadian recession won't have big impact on US. Doesn't see risks of rapid asset price decline. Finally he said that '' Fed should not raise rates in 2015, since 2015 rate rise will delay achieving 2% inflation.''

- S&P sees Iraq oil production about 5M barrels per day by 2018.

- Eurogroup Head Dijsselbloem: '' Convergence needed before Euro area budget. Without convergence EU intergration is at risk. ''

- So far this session $CAD is outperforming versus most majors, except against the $NZD with +0.14% spot returns.

- Asian shares won a reprieve on Friday after the European Central Bank signalled its readiness to take further steps to shore up the European economy, and investors looked to U.S. jobs data. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent while Japan's Nikkei .N225 also ticked up 0.1 percent. Wall Street shares also ended up on Thursday, though they pared back much of earlier gains, with sentiment still fragile due to fears of a hard landing in the Chinese economy.

- Morgan Stanley picks GBP/USD as its technical FX chart of the week, where MS is medium-term bearish but sees the pair in a wide range over the next few months, and within this range there are set to be clear tradable moves. On the 10-year GBP/USD chart: "We believe that GBP/USD has completed a major multi-year corrective pattern, with the 1.7192 high of last year representing a 4th wave top. This implies that the early stages of a major 5th wave decline are currently developing, which has the potential to result in long-term GBP weakness against USD. Indeed, the long-term trendline from the 2008 lows has also been broken," MS notes."Indeed, the (a) wave of the 2nd wave correction appears complete with a top at 1.5930. An a-b-c structured (b) wave lower is now developing, with the final c wave lower under way. The move below the 1.5300 level confirms this bearishness and a further decline towards the 1.50/1.48 area is now likely. This would complete the (b) wave, allowing a (c) rebound towards 1.5819/1.5930 to complete the correction," MS adds.

- Draghi says ''ECB will closely monitor incoming data but he doesn't commit to more QE. ECB will use all tools within its mandate if needed..'' Slowdown in emerging markets weighing on global growth and eurozone exports. Growth likely to be continued to be dampened by reforms and balance sheet adjustments. Developments in emerging markets have the potential to further impact growth.''

- Oil prices will take cues from the market’s interpretation of Non-farm Payrolls today. Oil, Copper Pares ECB-Induced Gains, Gold Weak into Non-farm Payrolls.

- The Labor Department on Friday morning will release the most recent monthly employment report and another rock-solid gain of 200,000-plus is expected. But August is often a tricky month because so many people are on vacation, making it harder for the government to figure out how many jobs were created. Here are some crucial things to look for in Friday’s U.S. employment summary. Any gain over 200,000 would be seen as a sign the Fed will stay on course to raise interest rates this year, though a hike in September is viewed as increasingly less likely. The paycheck of the average American worker has been rising about 2% a year since 2010 instead of the 3% to 4% rates that often prevail in latter stages of a strong recovery. Wage growth has been stuck in the 2% range and more of the same is expected in August.

- Moody's assigns provisional (P)Aaa to Royal Bank of Canada's Series CB25 covered bonds.

- Joaquim Levy was supposed to be the man who would save Brazil’s finances. A University of Chicago-trained technocrat who earned the nickname “Scissorhands” for his tough budget-cutting policies, he strode into the Finance Ministry in January with a mandate to preserve the country’s precarious investment-grade rating. Now, eight months later, with Congress refusing to back key parts of his austerity plan and dissent growing within President Dilma Rousseff’s own cabinet, speculation is rampant that Levy will resign. When word got out Thursday afternoon that he would skip the upcoming meeting of G-20 finance ministers in Turkey -- a decision he’d reverse later in the day -- those concerns reached a fevered pitch. Traders pushed down the currency 0.6 percent in three minutes. Hours earlier, the Treasury canceled its weekly debt auction for the first time in over a year.

- Major news for today: US NFP (last NFP before September's Fed meeting), CAD GDP, 2-day meeting of G-20 in Turkey, Germany's July Factory Orders.

Have a nice Day and a great week!