The huge volatility in Sterling dominates Asian markets today. GBP/USD spikes lower to new 31 year low of 1.1995 before quickly recovering to 1.24 level. EUR/GBP hits as high as 0.9346 before treating back to 0.89 while GBP/JPY dives to 122.44 before recover to 128.90. It's believed that the sharp fall is triggered by so called "fat finger" misplaced trades or an error in programmed trading. Meanwhile, some attributed that to a large barrier option traded. The quick recovery in Sterling suggests that there is no follow through panic selling and the Pound would settle in range in near term. But there is no change in the fundamentals as well as the bearish technical outlook as concerns of "hard" Brexit will continue to weigh on the currency. EU leaders are united in their tough stance on the issue. French president Francois Hollande urged to have "firmness" to " go all the way through the U.K.'s willingness to leave the European Union, even a "hard Brexit". German Chancellor Angela Merkel also said earlier that there is no exception to EU's four freedoms
Non-farm payroll report from US will be the main focus today. Economists expect NFP to show 173k growth in September with unemployment rate unchanged at 4.9%. Average hourly earnings are expected to grow 0.2% mom. Looking at other employment related indicators, ADP private payroll dropped 19k to 154k in September. The employment component of ISM manufacturing rose from 48.3 to 49.7 but stayed below 50 handle for the third straight month. It's also stayed below 50 for all months this year except June. However, employment component of ISM non-manufacturing improved drastically to 57.2, up from 50.7. Conference board consumer confidence also rose from 101.8 to 104.1. Hence, overall, we'll likely have a solid NFP report today with chance of an upside surprise. Currently, fed fund futures are pricing in 63.9% chance of a December Fed hike but that would very much dependent on incoming data.
Elsewhere, Japan labor cash earnings dropped -0.1% yoy in August. Production data will be the focus in European session as Germany and UK will release industrial production. UK will also release trade balance. US will release NFP while Canada will also release employment data and Ivey PMI.