4 Nov: Solid US Jobs data propels stocks to all time highs. US$ mixed. RBA, BOE rate decisons this week.

By | November 4, 2019

It was a busy session on Friday after a slew of important data from the US and updated reports that US/China trade talks are progressing well and could be in line to sign an initial deal later this month. By the end of the session, the S+P was closing the week at a new all-time high, the US$ was a little lower and WTI continued its recent choppy price action in rallying sharply, by 3.5%, on the back of the positive trade news and also because of the upbeat employment data and some positive comments from various Fed board members on the state of the economy.

In terms of data, the NFP report showed 128k growth in October, above expectation of 105k while the prior month’s figure was revised sharply higher from 136k to 180k. Job growth has averaged 167k per month thus far in 2019, compared with an average monthly gain of 223k in 2018. The unemployment rate edged higher to 3.6%, from 3.5% and matched expectations, while the participation rate was little changed at 63.3%. Average hourly earnings rose by 0.2% mm in October, below expectation of 0.3% mm.

The jobs data was initially supportive of the US$, but things turned around a little after the release of the US October ISM manufacturing index which came in at 48.3 vs 48.9 expected; up from the previous months 47.8, but rather denting the earlier enthusiasm to buy dollars. The damage was not great and the DXY fell by 0.10% on the day.

In the stock markets, the better-than-expected jobs report and the trade-talk reports combined to set off a decent rally for stocks, with the S+P and the Nasdaq both closing at new all-time highs.

Looking ahead, there will be plenty going on in the week ahead, with the focus being on the RBA (Tuesday) and BOE (Thursday) meetings although both are expected to remain on hold and the interest will be in the statements. No Press Conference is scheduled from each meeting although Bank of England Governor, Mark Carney will be speaking after the conclusion of the BOE Meeting.

Ahead of those events, Monday begins with the September  Australian Retail Sales (exp +0.2%)  and then the ANZ Job Ads and TD Inflation  for October, which comes ahead of the EU Sentix Investor Confidence Survey (exp -13) , EU Mfg PMIs and US Factory Orders (exp -0.3%).

Looking ahead, aside from the RBA (and Melbourne Cup) Tuesday will feature the global Services/Composite PMIs, and US Trade Balance, while Wednesday will see the NZ Unemployment, BOJ Minutes and EU Retail Sales. Thursday will have a Eurogroup Meeting at which Brexit is likely to again be the main item on the agenda, while Friday will be rather thin, although the RBA Monetary Policy Statement, EcoFin Meeting and China Trade Balance are all due. Have a good week.

Economic data highlights will include:

Mon: Japan Holiday, Australian ANZ Job Ads, TD Inflation, Retail Sales, EU Sentix Investor Confidence Survey, EU Mfg PMIs, ECB President-Lagarde Speech, UK Construction PMI, US ISM NY Business Conditions, Factory Orders

Tue:   AIG/CBA Australian Services PMIs, NZ Commodity Price Index, Caixin China Services PMI, RBA Interest Rate Decision/Statement, UK Services PMI, EU PPI, US Trade Balance, US Services/Composite PMIs, ISM Non Mfg PMI, API weekly Crude Oil Stock Inventory, Fed speakers Evans/Williams

Wed: NZ Unemployment, BOJ Minutes, Japan Services PMI, German Factory Orders, EU Services PMIs, Composite PMIs, Retail Sales, EIA weekly crude oil stock change.

Thur: Australian Construction PMI, Trade Balance, RBNZ Consumer Inflation Expectation, German Industrial Production, China Foreign Exchange Reserves, EU Eurogroup Meeting, Economic Bulletin, EU Economic Growth Forecast, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, Bank of England Governor, Mark Carney Speech, US Consumer Credit Change, Jobless Claims

Fri: Australian Home Loans, RBA Monetary Policy Statement, Japan Eco Watchers Survey, Coincident Index, Leading Economic Index, China Trade Balance, EU EcoFin Meeting, German Trade Balance, Current Account, Michigan Consumer Sentiment Index

Market moves, in brief:

FX: DXY 97.22 (-0.11%)

Bonds: US10Y; 1.718% (+1.08%), German 10Y; -0.381% (+6.0%), UK 10Y; +0.575% (+6.56%), Australian 10Y; 1.109% (-3.75%), NZ 10Y; 1.284% (-2.54 %), China 10Y; 3.265% (-0.14%)

Stock Indices: DJI; 1.11%, S+P; +0.97%, NASDAQ; +1.13%, EUStoxx50; +0.54%, FTSE100; +0.75%, Shanghai Composite; +0.99%,

Metals: Gold $1513 oz (+0.06%), Silver $17.11 oz (+0.02%), Copper $2.6630 lb (+0.95%), Iron Ore $83.55 per tonne (NYMEX) (+0.97%),

Oil: WTI $56.08 pb (3.60%)

EURUSD: 1.1163
Res  1.1180  1.1200  1.1220
Sup  1.1150  1.1130  1.1110
USDJPY: 108.17
Res  108.30  108.65  109.05
Sup  107.90  107.55  107.10
GBPUSD: 1.2938
Res  1.2965  1.2990  1.3015
Sup  1.2925  1.2900  1.2870
USDCHF: 0.9855
Res  0.9870  0.9890  0.9910
Sup  0.9840  0.9820  0.9800
AUDUSD: 0.6914
Res  0.6930  0.6945  0.6960
Sup  0.6900  0.6885  0.6870
NZDUSD: 0.6431
Res  0.6455  0.6470  0.6485
Sup  0.6415  0.6400  0.6385
S&P.fs: 3063.03
Res  3070.00  3080.00  3090.00
Sup  3050.00  3040.00  3030.00
DJ30.fs: 27258.50
Res  27315.00  27395.00  27500.00
Sup  27175.00  27080.00  26965.00
SPI200.fs: 6668
Res  6680  6695  6710
Sup  6655  6640  6625
XAUUSD: 1513.36
Res  1515.00  1520.00  1525.00
Sup  1505.00  1500.00  1495.00
XAGUSD: 18.11
Res  18.15  18.25  18.35
Sup  18.00  17.90  17.80
WTI.fs: 56.12
Res  56.30  56.90  57.50
Sup  55.55  55.00  54.50