Mixed Sentiment ahead of US Non Farm Payroll Data


The US markets closed higher yesterday boosted by positive economic data. The equity markets closed in the positive as investors began to weigh in on the all important US labour market data later today. The ADP employment data beat market estimates modestly, coming out at 176k against the consensus of 175k. The ISM non-manufacturing PMI data came out better than expected posting an expansion of 58.6 against the estimates of 55.2. A slump in the orders for transportation equipment saw demand for US manufactured goods drop for the first time since July this year.

Investors will be cautious going into friday ahead of the key non farm payroll data. Market estimates the US added 178k new jobs, up from the previous figure of 162k. The unemployment rate is expected to remain unchanged at 7.4%. Any data that comes inline or above expectations is likely to cement the Fed’s view on a potential tapering of its QE policy. The FOMC is scheduled to meet the week of September 18th which will be closely monitored.

Yesterday also saw the ECB and the BoE review their monthly monetary policy with nothing new to add, especially in regards to the BoE. Draghi reiterated his stand on keeping a flexible interest rate policy ready to cut rates further should the need arise. The Euro lost ground against the Greenback and closed the day at 1.31185. Today’s non farm data, if it beats the market expectations could see the Euro lose more ground.

It is widely expected that the jobs data is likely to come out better than expected after July’s data disappointed investors. The bullish sentiment is largely attributed to positive economic data from the US for the month of August, especially the weekly unemployment benefits claims. Even if the job numbers fail to impress, a knee-jerk sell off in the Greenback is only expected to be short term considering wider geo-political situation in the Middle East and the impending US strike on Syria.

In today’s early Asian session, the Yen gained some ground as the Asian equity markets slid into the red. Australia braces itself for the weekend elections with snap polls hinting at a possible win for Tony Abbot by a margin of 8%. The Nikkei 225 index dropped 1.13% while the Topix lost 0.91%. The Hang Seng index saw mild gains of 0.11%. The ASX200 was down 0.29%.

Gold futures remained flat after losing 0.11%, trading at $1371 to an ounce. Silver futures saw some gains, rising 0.12% trading at $23.29 to an ounce.

Key economic data for today besides the US unemployment data includes the Consumer Price Index from Switzerland which is expected to remain flat, followed by the manufacturing production data from the UK. Towards the US session, Canada will be releasing their unemployment data later followed by the Ivey PMI data