Canadian Employment Plunged, US NFP Is Next

Greek confidence vote could change sentiment that improved after referendum plan was scraped; Italy agreed to reforms monitoring, EU final services PMI worse than estimates; Canadian labor market weakened. Market turns to NFP, unemployment rate and Canadian Ivey PMI.

The USD trades weaker against most majors. The exception is CHF that is weakening across the board as EURCHF rallies and CAD that dropped on weak labor market data. Major European equities are up nearly 1%.

G20 meeting continues today and investors can only hope that today will be less confusing than yesterday. A list of reports and headlines that were later denied or proven to be inaccurate is likely to keep major players on the edge of their seat willing to change their bias in a second. Market sentiment improved after Greek referendum plan was scraped but that could all change as the confidence vote takes place later today.

Italy has agreed to allow the IMF and the EU to monitor its progress on privatization and pension reform. Even though this step by itself is not significant, it could help to bring down the surging 10 year yield as the reforms become more credible. Italian 10 year continues to yield around 6.2%

One does not need many words to describe today's revisions to October services PMI: they all disappointed. To be more precise, German services PMI stayed above the 50 level but was revised considerably lower to 50.5 from flash 52.1. Italian and French service sector is deeply in the contraction territory at 43.9 and 44.6. Eurozone's final services PMI was revised lower to 46.4 from flash estimate of 47.2 and the composite PMI fell to 46.5 which is the lowest print in more than two years. The probability that the Eurozone will be able to avoid a recession seems minuscule.

The number of employed Canadians in October plunged -54K from +60.9K a month earlier. The unemployment rate ticked up to 7.3% from 7.2%. USDCAD jumped upon the announcement from 1.0110 to 1.0185. Even if equity markets continue to rise, return below parity seems unlikely for now.

The New York session kicks off at 8:30 am ET with eagerly awaited labor market data. October NFP is expected slightly lower at 97K from previous 103K while the unemployment rate is seen unchanged at 9.1%. Wednesday's ADP report bested expectations when it printed 110K so a positive surprise could materialize.

Canadian data include September building permits due at 8:30 am anticipated to grow 2.7% after plunging -10.4% in August. October Ivey PMI due at 10:00 am is seen unchanged at 55.7.