DJIA dropped sharply for another day by -392.41 pts, or -2.32%, to close at 16514.10. But Asian markets stabilized as China suspended the new "circuit breaker" that halted stock market trading twice this week. At the time of writing, Nikkei is trading up 0.2%, HK HSI up 0.9% and China SSE (L:SSE) composite up 0.7%. Crude oil also recovered after dipping to as low as 32.1 and is back above 33.3. In the currency markets, yen and swiss franc remained the strongest major currencies on risk aversion this week.
Markets are paring bet on a March rate hike by Fed probably due to this week's global market rout. As of yesterday, fed fund futures are pricing in 45% chance of another 25bps hike by March. That compares to around 55% earlier this week. And dollar, thus, is under mild pressure against Euro and Swiss Franc. Dollar index is back at around 98.5 after spiking to 99.63 earlier in the week. Overall, the greenback is maintaining gains against commodity currencies and sterling this week due to risk aversion. But dollar is trading down against euro and swiss franc and in particular yen.
Non-farm payroll report will be the main focus today. But based on overall market sentiments, reactions could be skewed to the downside. That is, reactions to downside surprises would be larger than to upside surprises. Markets are expecting NFP to show 200k growth in December with unemployment rate unchanged at 5.0%. Looking at other job data, employment component of ISM manufacturing dropped back to contraction region at 48.1 in December. Employment component of ISM services rose slightly to 55.7. ADP job growth rose to 257k and beat expectations. Four week average of initial claims rose slightly to 276k but stayed low. Conference board consumer confidence rose to 96.5. So we'd more likely get a solid NFP report today.
Elsewhere, Australia retail sales rose 0.4% mom in November. Japan labor cash earnings rose 0.0% yoy in November. Swiss will release unemployment rate and CPI, German will release trade balance and industrial production, UK will release trade balance in European session. Canada will release job data in US session.