Today is the calm before the storm as we await the US jobs report today at 1 30pm
Risk is still positive after this week’s central bank action but the markets are still pessimistic, with ‘the eurozone crisis tumour ‘still there. If the central banks fail to deliver what the markets want at the EU summit next week in the way of more ECB/IMF involvement or some sort of a euro common bond, then we are going to back to what we saw in October when we had similar Central Bank action, which was a brief risk rally followed by a major risk off trend. A break back above 1.3615-1.3625 will indicate the next significant move in a positive direction.
The highlight will be the US job report this afternoon, with range bound markets expected before hand. We do see the release of UK PMI index before hand at 9.30am (UK time), with expectations of 52.00. We may also see some more headlines to trade off as UK PM Cameron meets the French President Sarkozy.
The market for now is sitting on the sidelines and in tight ranges as we wait for what everyone expects a strong US jobs report today after a robust ADP report this week and a strong US ISM reading yesterday above 50. Today is continuing the theme that further stimulus in the US may be averted with the recent raft of strong data. The forecasts are for non-farm payrolls to rise by 112k and private payrolls by 150k, with the unemployment rate to dip to 8.9%. Average hourly earnings are expected to increase by 0.2% and hours worked to rise to 34.4.
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