Friday September 3rd, 2021

The US$ steady, oil prices stable, equity markets mixed, US yields edge higher ahead of today’s key Nonfarm Payroll numbers. The US$ holds near its one-month low ahead of the critical NFP which is expected at 750k, down from 943k in July and is seen a critical signal for the Federal Reserve’s tapering decision. Following the NPF the ISM Services PMI is released at 10am est, expected at 61.5 down from 64.1 in July, impacted by the rising covid cases. Markets have consolidated ahead of NFP but after Wednesday’s downbeat ADP results many analysts are expecting a weaker NFP result which could increase volatility and put further pressure on the US$. In other news, GM to halt production at nearly all N.American assembly plants due to new chip supply issues. China says climate talks with US envoy Kerry were ‘candid, in depth, pragmatic’. Eurozone retail sales weaker than expected in July. Covid, Japan’s PM Suga will not seek relection after failing to control the covid outbreak. US Dr Fauci said new ‘mu’ covid strain isn’t an immediate threat to the US, he also said he wouldn’t be surprised if covid vaccinations require a 3rdshot. Australian PM seeks a quicker reopening after covid vaccine swap with the UK. In currency markets, if we see a surprise in either NFP or US Services PMI today we have the potential for increased US$ volatility. CNY is up 0.1%, Asian currencies are down 0.2% on average vs US$. Trading currencies are mixed with JPY up 0.05%, NZD & MXN firms 0.2%, AUD strengthens 0.45% while ZAR rallies 0.6% while NOK falls 0.1% vs US$. 

Oil prices are steady ahead of the US jobs report, finding support from increasing demand and the potential of a slower recovery in the Gulf Coast after it recovers from Hurricane Ida. Expectations of stronger demand saw Goldman Sach’s Jeff Currie commenting that oil could top US$80pb by year-end. C$ extends to 2-week highs on a weaker US$ and firming oil prices but holds in early trading ahead of the US jobs data. Expect the US data dominate direction today as markets will interpret the jobs data for signals of Fed tapering expectations. Support resets to 1.2508 while resistance remains at 1.2650.

Euro breaks through 1.1850 and holds near 4-week highs ahead of the critical Nonfarm Payrolls. The Euro has shrugged off weak EZ service PMI drop below expectations and EZ Retails sales also disappointed both m/m and y/y. The US$ remains on the back foot as markets look to US NFP after disappointing ADP payroll results on Wednesday for indications on the Feds tapering direction. Intraday all focus will be on NFP for US$ direction. Support remains at 1.1760, while resistance rises to 1.1910. 

EURGBP holds steady ahead of US NFP data .8600 resistance level. Support resets to .8426 (1.1868) Feb 2020, if breached look for .8274 (1.2086) Dec 2019, while resistance holds at .8600 (1.1628).

GBP remains under pressure despite a weakening US$ index. The pound retreats from its monthly highs near 1.1850 from ongoing elevated UK covid cases, worries about new taxes and a weak services PMI results in August. Chancellor Sunak is set to unveil new taxes, breaking an election promise by the PM, who is already under fire for the hasty retreat from Afghanistan. Intraday US jobs data will dominate market direction. Support resets to 1.3780 and while resistance remains at 1.3855.