US stocks extended rally overnight as focus is turning to employment data. DJIA closed up 44.58 pts, or 0.26%, at 16943.9. S&P 500 closed up 6.95 pts, or 0.35% at 1993.4. Meanwhile, the rebound in treasury seems to be losing some steam as 10 year yield close slightly down at 1.83. Crude oil, is still struggling to find follow through buying above 35 handle. Gold, on the other hand, finally staged a breakout and reaches as high as 1269.3. But gold's strength is mainly due to selloff in dollar rather than safe haven flow. Dollar index's rebound seems to have completed at 98.85 earlier this week and is trading at 97.6 at the time of writing. Such development is also seen in the currency markets as Dollar is trading broadly lower against all major currencies, followed by Euro.
US non-farm payroll report is the main focus today and markets are expected it to show 198k growth in February. Unemployment rate is expected to be unchanged at 4.9% and average hourly earnings are expected to grow 0.2% mom. ADP report showed 214 growth in private sector jobs versus prior month's 193k. ISM manufacturing employment rose to 48.5 from 45.9 but stayed below 50. ISM services employment dropped to 49.7, below 50 for the first time since February 2014. 4 week moving average on initial jobless claims dropped to 270k, down from 285k. Conference board consumer confidence dropped to 92.2, down from 97.8. Overall, the pre-NFP data were mixed and indicated risk of slowdown in job growth. Today's NFP is unlikely to provide any spectacular result and there is risk of downside surprise.
But after all, the NFP report is unlikely to change market's view on the timing of Fed's rate hike. A March hike is basically ruled out. The chance for a June hike is at a mere 33%. Dallas Fed president Robert Kaplan also urged people to be patient on raising rates. He noted that "while I believe that excessive accommodation carries a cost in terms of distortions and imbalances in hiring, asset allocation and investment decisions, I also believe that, at this juncture, the Fed needs to show patience in decisions to remove accommodation."
Elsewhere in Japan, BoJ governor Haruhiko Kuroda said that he would use the "three dimensions" of monetary policy to push inflation back to 2% target. Those include qualitative easing, quantitative easing and negative interest rates. And, he pledged that "we'll always scrutinise risks and won't hesitate to adjust policy if necessary to achieve our price target." However, he is not considering to push interest rate further into negative territory for the moment.
On the data front, Aussie retail sales rose 0.3% mom in January. Japan labor cash earnings rose 0.4% yoy in January. Eurozone will release retail PMI today. US will release non-farm payroll and trade balance. Canada will release labor productivity, trade balance and Ivey PMI.