Sentiment Lifts On U.S. Data, NFP Watched

Positive job and manufacturing data from U.S. lifted sentiments overnight as the Dow closed up more than 1% at 13232. The forex markets was relatively steady and mixed though. Yen remained the weakest currency this week on recovery in risk markets as well as speculation of additional easing from BoJ ahead. Indeed, USD/JPY is heading closer to near term resistance at 80.37 and similar strength is also seem in GBP/JPY as it's getting close to equivalent resistance of 129.64. U.S. nonfarm payroll report will be the major focus today and could trigger another round of selloff in yen should the data beat expectations.

Markets are expecting NFP to show 120k grow in the U.S. job market in October while unemployment rate is expected to rise slightly back to 7.9%. This NFP report will also be an important one as it's the employment report before presidential election. A quick look at the leading reports saw ADP, with revised methodology, beat expectation and rose 158k in October. ISM manufacturing index employment component dropped to 52.1, from 54.7, but maintained itself in expansion region. The four-week moving average of initial jobless claims improved slightly to 367k, down from 375k. Conference board consumer confidence improved to 72.2, up from 68.4. So overall, they argues that the NFP this time would be solid but not spectacular.

Another piece of job data from Canada will also be watched closely. Net change is employment is expected to show 7.5k growth while unemployment rate is expected to dip slightly to 7.3% in October. Canadian dollar suffered some selloff last week on expectations that BoC will drop its tightening bias and recovered since BoC maintained status quo. Nonetheless, there is no strength of any sustainable rebound yet since comments from BoC Carney has been obviously more dovish than BoC's statement. The weaker than expected GDP report released earlier this week also limited the Loonie's strength even though risk sentiments improved. Today's job data from Canada will likely trigger some volatility.

The minutes of October 4-5 BoJ meeting showed that some members worried that the economy would be acknowledged retroactively to have entered a recessionary phase. Finance Minister Jojima said he will talk about the Japanese economic situation and risks from Europe and the strong yen in the upcoming G20 meeting in Mexico next week. Japan monetary base rose 10.8% yoy in October.

Australian dollar followed Asian equities and edged higher earlier in Asian session. The breach of 1.0410 resistance in AUD/USD suggests an upside breakout. But momentum is so far very unconvincing. News from Australia isn't positive to Aussie today. PPI rose 0.6% qoq, 1.1% yoy in Q3, lower than expectation of 1.0% qoq, 1.6% yoy. Treasurer Swan said that investment flows have propped up our sustained high dollar. And combined with fiscal consolidation and contained inflation, Australia has more room to run lower rates than we have in the past.

In the Euro Zone, Greek Court of Auditors ruled that plans to cut pension payments and raise the age of entitlement might be unconstitutional. This would impose some problem in the bailout as the Greek government, under pressure from the IMF and the EU, agreed to raise the retirement age from 65 to 67 and reduce pensions above 1000 euro progressively. This would part of the debt-ridden country’s austerity plan to reduce deficit. However, the court ruling would make it difficult for the Parliament to implement these measures. Worse still, it’s reported that a German Government official stated that there are still open questions, a whole series of open questions regarding Greece within the Troika, but then also within the Eurogroup.