News & Analysis

NFP figure surprises market – Earnings disappoint; GBP falls post Brexit phase one; USDJPY at 4-week highs.

Dec 11, 2017 | Daily Market Outlook

Today’s high impact news:

No high impact news due out today or tonight.

U.S employment figures came in mixed on Saturday morning, payrolls showed a better than expected rise to 228K, average earnings halted the USD dropping by 0.1% to 0.2% failing to meet expectations. The unemployment rate stayed steady at 4.1%. U.S stocks rallied driven by better than expected non-farm payroll figure. The Dow Jones jumped 117.68 pts higher, the S&P500 added 14.52 points and the NASDAQ closed 27.24 pts higher. The Dow Jones made it two positive sessions in a row to recover most the weeks earlier loses. “It was another solid report, but wages were a disappointing factor,” said Craig Bishop, vice president of U.S. fixed income at RBC Wealth Management. Economists expected a monthly increase of 0.3 percent or 2.7 percent for the year. “What it means is that it could take some of the pressure off the Fed to stick to its three rate-hike forecast for next year if wages soften up,” said RBC’s Bishop.

European markets finished higher on Friday. Brexit phase one has reached an agreement, this gave the FTSE a confidence boost as it closed 73.21 pts higher. The FTSE retraced all of its week’s losses and finished 29 points in the black. The DAX continued higher adding a further 108.55 pts. Buyers did break the 13,190 range at one stage in the session. The range currently stands as sellers regrouped late in the session. The Brexit divorce bill – EU negotiators were seeking €60bn to €75bn euros (£53bn-£66bn) but were bargained down by the UK to £35bn-£39bn.

The GBP was Friday’s big mover as Brexit continued to drive the currency. Unlike during the week, sellers ruled on Friday. The GBP was hit by solid selling to the USD, JPY and EUR. The JPY had a weak end to week losing ground to the EUR, USD and AUD. The USDJPY closed the week reaching 4-week highs. The USD failed to capitalize on the stronger NFP figure as average earnings culled its gains. The AUDUSD and GOLD surprised as they held firmer than expected. Both finishing off weekly low levels. Oil finished the week 73 cents higher closing above $73. Some key points – U.S. crude output has hit the highest levels since the 1970s. – Strong Chinese imports supported crude oil futures on Friday. – Global 2018 demand growth is seen at 1.5 million barrels per day, according to some analysts.

This week we have a very busy news week coming up including the Federal Reserve’s funds rate. Local ASX200 has started the week lower and the AUDUSD is trading flat on last week’s closing price.

UK100 – made a textbook support hold on Friday that looks to have confirmed a longer period higher low. With Brexit deal one completed is this a starting point for further gains?

Good trading from Eightcap.

Sources; Reuters, CNBC – SkyNews

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