USD Remains Strong After Stellar NFP Numbers, Euro Remains Weak Amidst Uncertainty in Portugal
November 10, 2015 7:46 am
Asian equity markets fell to one-month lows early this morning as the possibility of higher borrowing costs in the US and slower global economic growth weighed on riskier assets. MSCI’s broadest equity index of Asia-Pacific shares outside Japan fell 1 percent, while Hong Kong’s Hang Seng also fell 1.2 percent as Chinese consumer inflation data came in at lower than expected, adding additional deflationary pressure in the world’s second-largest economy. Over in Japan the Nikkei 225 fell 0.3 percent from a 2.5 month high hit on Monday.
The strong U.S. jobs data published on Friday (271k instead of the 181k predicted) helped to change investors’ perception that the Federal Reserve may raise interest rates at its December meeting, with money market futures pricing in the likelihood of a rate hike next month at more than 70 percent. The two-year Treasuries yield in the US hit a 5.5 year high of 0.958 percent on Friday, pricing in the expectation of an interest rate rise. Higher U.S. interest rates make parking funds in the Dollar more attractive especially with divergent monetary policy across the pond in Europe, with its current negative interest rates.
In the FX markets, such a divergent policy outlook helped to cap the Euro and lift the Dollar, although the Dollar slipped slightly on profit-taking after making sharp gains on Friday. The Dollar’s index pulled back to 99.075 from Friday’s seven-month high of 99.345, while the Greenback dropped slightly against the yen to 123.17, from a 2 month high of 123.60 set on Monday. In addition, the Euro ticked up to $1.0743 from Friday’s 6 month low of $1.0704. The Euro remains weak as Portuguese government bond yields hit a four-month high after the Socialist party reached an agreement with the radical Left-bloc and the Greens on forming a united bloc to try and oust the recently-formed centre-right government.
The commodity markets have been under pressure recently due to the recent strength of the US Dollar, on the increased expectations of a rate rise in December. Gold traded at $1,092.20 per ounce, near its three-month low of $1,085.50, while Silver also fell to one-month low of $14.48 on Monday. Moreover, Copper slid to a six-week low of $4,940 per tonne, hit by continued concerns about demand from China. In the energy markets Crude oil showed losses for a fourth straight day on Monday on news of fresh build up of inventories. Brent crude traded $47.38 a barrel, having slipped more than 7 percent from last week’s high. In the UK equity markets Vodafone reported a better-than-expected growth in second quarter revenue, helping it return to earnings growth for the first half and nudge its expectations for the year towards the top of its guidance. The shares are trading at 223.25 +4.03%
Asian equity markets fell to one-month lows early this morning as the possibility of higher borrowing costs in the US and slower global economic growth weighed on riskier assets. MSCI’s broadest equity index of Asia-Pacific shares outside Japan fell 1 percent, while Hong Kong’s Hang Seng also fell 1.2 percent as Chinese consumer inflation data came in at lower than expected, adding additional deflationary pressure in the world’s second-largest economy. Over in Japan the Nikkei 225 fell 0.3 percent from a 2.5 month high hit on Monday.
The strong U.S. jobs data published on Friday (271k instead of the 181k predicted) helped to change investors’ perception that the Federal Reserve may raise interest rates at its December meeting, with money market futures pricing in the likelihood of a rate hike next month at more than 70 percent. The two-year Treasuries yield in the US hit a 5.5 year high of 0.958 percent on Friday, pricing in the expectation of an interest rate rise. Higher U.S. interest rates make parking funds in the Dollar more attractive especially with divergent monetary policy across the pond in Europe, with its current negative interest rates.
In the FX markets, such a divergent policy outlook helped to cap the Euro and lift the Dollar, although the Dollar slipped slightly on profit-taking after making sharp gains on Friday. The Dollar’s index pulled back to 99.075 from Friday’s seven-month high of 99.345, while the Greenback dropped slightly against the yen to 123.17, from a 2 month high of 123.60 set on Monday. In addition, the Euro ticked up to $1.0743 from Friday’s 6 month low of $1.0704. The Euro remains weak as Portuguese government bond yields hit a four-month high after the Socialist party reached an agreement with the radical Left-bloc and the Greens on forming a united bloc to try and oust the recently-formed centre-right government.
The commodity markets have been under pressure recently due to the recent strength of the US Dollar, on the increased expectations of a rate rise in December. Gold traded at $1,092.20 per ounce, near its three-month low of $1,085.50, while Silver also fell to one-month low of $14.48 on Monday. Moreover, Copper slid to a six-week low of $4,940 per tonne, hit by continued concerns about demand from China. In the energy markets Crude oil showed losses for a fourth straight day on Monday on news of fresh build up of inventories. Brent crude traded $47.38 a barrel, having slipped more than 7 percent from last week’s high.
In the UK equity markets Vodafone reported a better-than-expected growth in second quarter revenue, helping it return to earnings growth for the first half and nudge its expectations for the year towards the top of its guidance. The shares are trading at 223.25 +4.03%
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