Danske Research Team
Danske Bank A/S
Market movers today
-
Today, the US jobs report for November due out at 14:30 CET will be the main focus. Despite the moderate headline employment growth of 161,000, the October US jobs report was strong with declines in both the unemployment and underemployment rates and acceleration of wage growth to 2.8% y/y, the highest wage growth since 2009. This should be sufficient ‘further evidence' for the FOMC to raise rates on 14 December, which is now also fully priced in by markets. For the November report we estimate non-farm payrolls increased by 170,000 (consensus: 180,000) in line with recent trends and estimate an unchanged unemployment rate at 4.9%. We also expect average hourly earnings increased 0.2% m/m implying an unchanged wage growth rate of 2.8% y/y, see also US Labour Market Monitor: November jobs report not a key determinant for Fed’s decision to hike in December.
-
The Fed's Brainard and Tarullo (both ‘dovish' voters) are scheduled to speak today.
-
We also get PMI Construction data for November in the UK. The November release will give insight into whether the downturn in the construction sector after Brexit continues to ease, despite the financial pressures on the industry from higher input prices due to the weaker GBP. We think there is currently limited upside potential for the construction sector, and estimate the PMI construction index to be unchanged at 52.6 in November.
-
In the Scandi countries, unemployment data for Norway and currency reserves data for Denmark are released today, see next page.
Selected market news
Asian shares lost some of their recent gains this morning, after subdued sessions on Wall Street and Europe. 10Y US Treasury yields and Brent crude futures hit multi-month highs overnight, driven by the recent OPEC deal and strong US manufacturing data, fuelling expectations of higher rates.
The upcoming Italian constitutional referendum on Sunday continues to weigh on investors' minds. Although a ‘no' vote now seems largely priced into markets and the ECB has signalled that it is ready to step up purchases of Italian government bonds temporarily to ease market conditions, European shares fell yesterday and Italian 10Y yields rose back to 2.042%. Data on Thursday showed that Italy's manufacturing GDP expanded by 0.3% q/q in Q3 16 and manufacturing activity in November grew at its fast pace since June, providing some good news on the economic front for prime minister Renzi ahead of the vote this weekend.
Yesterday, we also had France's President Hollande declaring that he would not seek a second term in office in the presidential election in 2017, a surprise move that has heightened speculation about a possible candidacy of Prime Minister Valls for the Socialist party.
Speculation emerged yesterday that the ECB will extend its QE purchases beyond March 2017 at the policy meeting next Thursday, but also signal that the programme will eventually end as a compromise to conservative Governing Council members, according to senior sources from the central bank. Eurozone market inflation expectations now stand at a 10-month high of 1.64%.
Download The Full Daily FX Market Commentary
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.