Friday 09.45 BST
What you need to know
- Equities cool ahead of US jobs report
- Non-farm payrolls data expected to show addition of 183,000 jobs
- Dollar continues to drift lower ahead of the data
- Crude edges lower after Thursday drop
“We estimate that US non-farm payrolls rose by 200,000 in July, [stronger than consensus forecasts]. This should have been enough to push the unemployment rate back down to 4.3 per cent,” says Simon MacAdam at Capital Economics.
“Equity markets globally remain in fine fettle . . . Equities’ recent strength is due in part to price/earnings ratios climbing well above their historical averages, but we don’t think that valuations have become unsustainably high.”
Investors will be looking to US jobs data for any implications for the outlook for US monetary policy, as well as the record-breaking bull run on Wall Street stock markets and the sustained pressure on the dollar.
Consensus forecasts predict that the US economy will have added 183,000 jobs outside the agricultural sector in July. Analysts predict that any surprise is likely to involve a bigger number. Meanwhile, Deutsche Bank points out that a hiring spree by internet retailer Amazon in August is likely to help the next set of data released on the first Friday in September.
“Next month’s employment report will likely factor more prominently into the Fed’s decision process going into the [Federal Reserve’s] September 20 [rate-setting] meeting,” says Brett Ryan, senior US economist at the bank.
In the run-up to the release of the non-farm payrolls report, the dollar is slipping further, with the index tracking the world’s reserve currency against a range of its rivals down 0.1 per cent at 92.71, taking it near its May 2016 low of 92.91. It has not traded under that level since January 2015.
The 10-year US Treasury yield is up 1bp at 2.226 per cent, however, having already dropped 5bp during Thursday’s session to a one-month low.
The euro is up 0.1 per cent at $ 1.1879, heading back toward Wednesday’s 30-month high of $ 1.1909. The pound is also up 0.1 per cent at $ 1.3148.
The Australian dollar swung to a gain after dipping briefly on news that the Reserve Bank of Australia had lowered its 2017 forecast for gross domestic product by half a percentage point due to the currency’s strengthening streak. The Aussie dollar was up 0.2 per cent on its US counterpart at $ 0.7964.
European equities are steady in opening trade, with the region-wide stocks 600 down 0.2 per cent overall. The FTSE 100 in London is flat and Frankfurt’s Xetra Dax 30 is down 0.2 per cent.
Asia-Pacific equities were mixed on Friday following a downbeat Thursday session in the US, when the S&P 500 closed down 0.2 per cent. Tokyo’s Topix index is down 0.2 per cent. The Shanghai Composite is down 0.4 per cent and South Korea’s Kospi is up 0.4 per cent.
Crude oil is stable after a choppy session overnight left prices lower. Brent crude, the global benchmark, is hovering just below the $ 52 a barrel mark, down 0.2 per cent at $ 51.91. West Texas Intermediate, the US marker, is down by the same margin and just below the $ 49 mark at $ 48.93.
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