Intraday Market Thoughts

US & Canada Jobs Report Next

by Patrik Urban
Jul 6, 2012 12:45

Spanish 10 year yields 7%; UK input and output producer prices ease further; German industrial production rose; Swiss deflation more intense. Markets await US and Canadian labor market data. Ashraf has given a 99K forecast for NFP. A new set of Premium Insights shall be released after the US jobs report. See details below.

Markets are trading within relatively tight ranges ahead of the key US and Canadian labor market figures. European equity indices are losing about 0.5%.

Spanish and Italian 10 year yields continue to rise in the ongoing session after soaring yesterday. Spanish 10 year yield gained over 3.4% today, wiping out the post EU summit decline and currently trades at 7.0%. Italian counterpart trades around 6.05% and also erased a significant portion of the decline seen since the EU summit. Rumors of Spanish downgrade contributed to the rise.

UK Input PPI dropped 2.3% in June from 0% y/y while producer output prices eased to 2.3% from previous 2.9% y/y. Consumer inflation is therefore likely to ease further in coming months, in line with the BOE's forecast. EURGBP trades slightly lower around 0.7963 which helped to push GBPUSD higher to about 1.5545.

In other news, German Industrial production was above expectations as it rose 1.6% in May from previous -2.2% and Swiss CPI fell 0.3% in June after a flat reading a month earlier which points to more intense annual deflation of 1.1% from previous 1.0%.

June NFP which is due at 8:30 am ET is expected higher at 97K from previous 69K and the unemployment rate is seen steady at 8.2%. ADP and the employment component of ISM non manufacturing bested expectations while the employment of ISM manufacturing declined only marginally suggest a result in line with expectations. A strong print would lead to a drop in QE3 speculation and therefore underpin the USD.

Canadian employment that is also due at 8:30 am is seen slightly lower at 5.1K from previous 7.7K and the unemployment rate should remain unchanged at 7.3%. Canada will also release Ivey PMI that is anticipated to slow considerably to 55.4 in June from previous 60.5. Ivey PMI is due at 10:00 am.

EURUSD, GBPUSD & GBPJPY were all stopped out in the last latest Premium Insights, with USDCAD and AUDUSD hitting all targets. USDJPY and Gold remain in progress. A new set of Premium Insights will be released after NFP. Click here to subscribe


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