US Fed's Rosengren expects rate hike this year despite 'weak' September jobs report

Good morning,

- The majors outperformed vs $USD on Friday. Strongest was the $CAD with +0.88% spot-returns, weakest was the $JPY with +0.02% returns.

- $NZD, $AUD, and $JPY are expected to be the most active majors vs $USD with 1W implied volatility at 12.03, 11.37, and 10.85 respectively.

- Yen Stayed Calm as Labor Earnings Drop from 4-Year High.

-Comments hitting the wires from an interview given by the Fed Rosengren; jobs report could signal greater economic weakness that delays hik ewould delay rate hike to 2016 if unemployment rises or GDP growth below 2%...Dove turned hawk seemingly not quite sure what he wants..no need for evidence of higher inflation or wages to raise rates would back "appropriate" rate hike (even if market probability 30%).

- In a recent update, HSBC Global Research said the RBA is likely to keep the interest rate on hold as the depreciating Australian dollar loosens financial conditions. HSBC chief economist, Australia and New Zealand Paul Bloxham said: “Currency depreciations may not work for every country, but the lower Australian dollar is already providing clear support for Australia’s growth. “With the Australian dollar doing the work for them, we expect the RBA to be reluctant to cut rates further, despite the slowdown in China and the recent delay to the [US] Federal Reserve’s interest rate ‘lift off’.”

-CAD Pushes Higher After Hitting 11yr Low, Still Oil Dependent.

- A surprise stumble in non-farm job growth in the United States has helped support the New Zealand dollar as it heads into a new week. The kiwi lifted from the low US64 cent range on Friday last week to US64.57c on Monday morning. US non-farm payrolls data, released on Friday, was always heavily anticipated but the latest report caught markets off guard. Non-farming employment rose by 142,000 in September and August figures were revised lower from a reported 173,000 to 136,000. This was the smallest two-month gain in employment in more than a year, Reuters reported. As a result, the greenback weakened and stocks were sold off.

- Top event risk this week: #RBA rate recision (Tue), #BOE rate decision (Thu), FOMC meeting minutes (Thu), Canadian employment (Fri).

- $EURUSD climbed to a fresh weekly high following the dimsal data prints coming out of the US.

- The biggest economic event for New Zealand this week will be the GlobalDairyTrade auction overnight on Tuesday. There have been three consecutive lifts in dairy prices from August and Tennent-Brown said results from the next auction could move the currency.

- The Canadian dollar flexed some muscle last week, as USD/CAD dropped almost 200 points, closing at 1.3150. There are 9 events this week, highlighted by Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD. The Canadian dollar gained ground as a result. Canadian GDP beat the forecast, which also helped the loonie improve against the greenback after hitting a new 11 year low.In the US, the week ended on a sour note, as NFP report was a huge disappointment. The Canadian dollar gained ground as a result. Have the tables turned for the pair? The Canadian dollar has finally showed some improvement against its US counterpart, and the rally could continue if the markets remain nervous after last week’s nightmarish Nonfarm Payrolls report. This week’s key Canadian events, led by Employment Change, could have a big bearing on the Canadian dollar’s fortune this week...1.2798 is the final support line for now.

- Major news for today: ISM Non-Manufacturing Index, EU Retail Sales, US Labor Market Conditions.

Have a great week!