Markets | 10/11/2014 | Effects from last week NFPs and Draghi seeking for banking know-how for ECB

 Euro Advanced by U.S. Non-Farm Payrolls. The euro rose against the U.S. dollar on Friday, pulling away from a 2-year low, as disappointing U.S. non-farm payrolls data signaling the Federal Reserve may hold rates lower for longer amid sluggish global growth. The Department of Labor said the U.S. economy added 214,000 jobs last month, beating expectations for an increase of 231,000, with the unemployment rate ticked down to 5.8% from previous 5.9%. But the euro's gains were expected to remain limited as Thursday's remarks by European Central Bank President Mario Draghi continued to weigh.

 Sterling Shrugged-Off U.K. Trade Deficit. Sterling moved away from 14-month low on Friday after lower-than-expected U.S. payrolls data reduce demand for the greenback. Earlier, sterling was hit by a data showed Britain's goods trade deficit widened more than expected in September, largely due to weak export growth to the European Union. The deficit data followed purchasing managers' index (PMI) surveys earlier in the week that pointed to an end-of year slowdown in the UK economy.

Loonie Rises After Economy Unexpectedly Adds Jobs. The Canadian dollar rose after a report showed the nation unexpectedly added jobs last month and the unemployment rate dropped to a 6-year low. Employment rose by 43,100 after a jump of 74,100 the prior month and the jobless rate fell to 6.5% from 6.8%, Statistics Canada said. The rise in payrolls comes after Bank of Canada Governor Stephen Poloz said on Nov. 3 the economy still requires monetary stimulus to drive the recovery in the face of “headwinds” of weak global growth.

 U.S. Adds 214,000 Jobs in October, Jobless Rate Down to 6-Year Low. The U.S. generated 214,000 new jobs in October to nudge the unemployment rate down to a 6-year low of 5.8%, as another 400,000-plus joined the labor force. A healthy increase in hiring that points to solid economic growth in the months ahead. So far in 2014 the U.S. has gained an average of 229,000 jobs a month, the fastest pace since 1999. Hiring in September and August were also higher than previously reported. The U.S. has created 2.3 million jobs this year and is on track for the biggest gain in almost a decade. What’s more, job openings recently hit a 13-year high while layoffs have fallen to the lowest level since the turn of the century.

 

 Asian Shares Cautious Ahead U.S. Jobs Report. Asian equities traded mixed on the last trading session of the week as investors were remain cautious ahead of the key U.S. Non-farm payrolls report. While a positive sentiment from the ECB and the Chinese central bank seen wore off. Japan's Nikkei climbed 0.52% on Friday, supported by the Japanese yen which hovered near 7-year low against the U.S. dollar, but later gains were trimmed by profit-taking. South Korean KOSPI finished 0.18% higher as Hyundai Motor shares rallying over 2% after Thursday's news that its operating profit soared 133% on year in the July-September quarter. Hang Seng ended 0.42% lower, pressured by profit taking and concerns over the status of a cross border stock trading scheme.

Europe Closes Mixed on Ukraine Fears. European stock closed lower on Friday, with the exception of the U.K.'s FTSE 100, as tensions in Ukraine unsettled investors once more and after the U.S. economy produced fewer than expected jobs in October. Pessimism over economic growth and uncertainty surrounding further European monetary stimulus weighed on bank stocks in Europe, with several Greek banks closing down between 9% and 10%. London's FTSE 100 ended the week's session around 0.25% higher, boosted by strength in the commodity-related stocks. Germany's DAX closed down 0.9% with investors concerned about impact developments in the Ukraine crisis on the German economy, following reports of Russian tanks crossing into eastern Ukraine. While the French CAC40 also loss 0.9%.

 Wall St Hold at Record Levels After NFP. U.S. stocks held at all-time highs as a report showed companies hired fewer workers than forecast while the jobless rate dropped to a 6-year low, supporting speculation the economy is withstanding an overseas slowdown. Energy stocks rallied as Diamond Offshore Drilling Inc. and Newfield Exploration Co. climbed more than 3%. Sears Holdings Corp. soared 31% on plans to explore the sale and leaseback of 200 to 300 stores. Walt Disney Co. slid 2.2% after it reported profit fell at TV networks. The Dow Jones Industrial Average climbed 0.1%, followed by the S&P500 which added around 0.05%. While, the Nasdaq Composite dropped 0.1%. Federal Reserve Chair Janet Yellen on Friday said central banks must do whatever it takes if governments won’t use the public purse to invigorate economies struggling with low growth and below-target inflation.

Gold Posts Biggest Daily Gain Since June. Gold settled more than 2% higher on Friday and posted its biggest one-day gain in nearly 5 months as a retreat in the U.S. dollar and heavy short-covering lifted bullion from an earlier 4-1/2 year low. Market watchers said bullion could still extend its slide after tumbling below $1,180 an ounce, which was the lowest level reached during gold's 28% plunge last year. Gold had been under pressure for a week from a rising dollar, which has benefited from expectations that the Fed will tighten monetary policy before other central banks.

 Oil Rebounds on Weather, Geopolitic Concerns. Crude oil settled higher on Friday, capping off a bearish week with a rally driven by in part by concerns about a collapse of the Ukrainian ceasefire and forecasts of unseasonably cold temperatures in the U.S. Midwest. The Ukrainian military accused Russia of sending 32 tanks and truckloads of troops across the border, which if true would signal an end to the lull in violence between the 2 countries and re-ignited concerns about supply disruptions. While frigid forecasts for the U.S. Midwest driven by a polar vortex in the next 2 weeks boosted the market for heating oil, indirectly boosting demand for crude oil which can be refined to heat homes.

 

Sprint Take Additional Charge on Severance Costs. Sprint Corp. said it would take an additional charge of $105 million for severance and related costs in the September quarter as the telecommunications company presses ahead with job cuts. The charge disclosed Friday is in addition to a previously reported charge of $160 million related to severance and other items stemming from the job cuts, Sprint said. Sprint said earlier this month that it would eliminate 2,000 more jobs in a bid to hit $1.5 billion in annual cost cuts. The move was unveiled as the company reported lackluster results for the September quarter, as it lost 336,000 lucrative postpaid customers, while posting a bigger-than-expected net loss in its bottom line.

 ArcelorMittal Profit Boosted by Steel Unit. ArcelorMittal on Friday reported its second consecutively quarterly profit due to a broadly stronger performance from its steel business that more than offset the negative impact of a falling iron ore price on its mining business in the third quarter. ArcelorMittal, the world's largest steelmaker by shipments, swung to a net profit of $22 million in the third quarter compared with a net loss of $193 million in the same period a year earlier, but fell 58% from $52 million in the second quarter. Revenue rose 2.2% on the year to $20.1 billion while earnings before interest, taxes, depreciation and amortization or Ebitda, rose 11% to $1.91 billion in the third quarter compared with the same period a year before. This beat analysts' expectations of $1.81 billion based on a poll of 12 analysts.

 Technical Outlook

 EUR/USD. Bias is still bearish as long as prices stay below 1.2580 area, with break below 1.2400 area should target 1.2280 as key support area. Immediate resistance is found at 1.2440, break above this area should open a door to test 1.2580 area. Only a break above this area should change bias into bullish targeting 1.2640 region in nearest term.

GBP/USD. Bias remains bearish targeting 1.5720 area in medium term. Price is due to bullish correction phase targeting resistance around 1.5900 area, before targeting 1.5980 and 1.6035 region. Only a break above 1.6035 area which could halt current bearish outlook to move higher targeting 1.6125 region.

USD/JPY. The bias is bullish in nearest term especially if price able to make a clear break above 115.50 area to trigger further bullish momentum targeting 116.45 resistance area. On the downside, only a clear break back below 113.70 area would trigger further bearish correction scenario retesting 113.00 area before recovery to the upside.

USD/CHF. The bias is bullish in nearest term, with break above 0.9750 area is needed to should trigger further bullish pressure targeting 0.9840 region. Immediate support is seen around 0.9630 area, another consistent break below that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.9580 region.

AUD/USD. The bias is bearish in nearest term but we need a clear break below 0.8550 area to trigger further bearish momentum aiming 0.8440 area. Immediate resistance is seen around 0.8635 area, another consistent break above that area would bring the price to neutral zone as direction would become unclear in nearest term perhaps retesting 0.8760 region.

 XAU/USD. The bias is bullish in the short term especially if price able to break above the 1175 area, which will trigger further bullish momentum to test the 1182 area before aiming the 1190 area. Conversely, immediate support is seen around the 1156 area. A consistent break below that area would bring the price to a neutral zone in the short term perhaps retesting the 1150 area.

Hang Seng Futures. The bias is bearish in the short term especially if price able to break consistently below the 23425 area, which will encourage further bearish pressure to test the 23250 area before targeting the 23100 area. Conversely, immediate resistance lies at the 23625 area. Break back above that area would bring the price to neutral zone in the short term, potentially to test the 23700 area.

Nikkei Futures. The bias is bearish in the short term though it still needed a clear break below the 16660 to support the sustainability of bearish correction scenario towards the 16555 area. While only a break back above the 16850 area that will relieve bearish pressure in the short-term, which opens opportunities for retesting the 16980 area.