Summary:

• US dollar ahead of the NFP report strongly gains against Antipodean currencies and UK pound
• Sentiment on European stocks is mixed, Spanish IBEX (SPA35) and Italian FTSEMIB (ITA40)  lead losses
• Besides the NFP report we also get job report from Canada this afternoon

Morning in Europe was quite calm as investors await the crucial figures form the US labour market. As far as currencies are concerned USD gained about 0.3% against AUD on the back of dovish signals from RBA’s Harper. Moreover, GBP was under pressure due to political issues. European burses cautiously began the last trading session this week. Only Spanish and Italian stocks moved deeper in the red. 

The Australian dollar hasn’t had a successful week as of yet, as it’s gotten a triple whammy from the Reserve Bank of Australia as well as the macroeconomic data. This time RBA’s member Harper suggested that another rate cut could be on the cards given lackluster wage growth which translated into slow growth in household income.

 Moving on, the pound has also gone off the boil lately following the PM May’s speech described by mass media as ’shambolic’. She was speaking at the Conservative Party conference in Manchester on Wednesday and while her speech was meant to re-energize her fractious leadership and build momentum for a domestic agenda, it resulted in a fiasco in the eyes of many observers.

European stocks were mixed on Friday morning despite positive sentiment on Wall Street. Although tensions between Catalonia and government in Madrid have eased somewhat, there is still a lot of uncertainty about the future one of the biggest economies in the euro area. Hence, Spanish IBEX (SPA35) now is losing almost 0.70%. The FTSEMIB (ITA40) is also moving down by 0.65% as the rescued Monte dei Paschi announced it will launch a voluntary public offer to swap shares owned by former retail bondholders into senior debt.

Politics has played a major role across the developed economies so far this year. We’ve had elections in Germany, New Zealand, France and most recently the independence referendum in Catalonia. All those events have brought about an increase in uncertainty which isn’t desirable by investors. Japan will be another country where the election is going to take place later this month.

The NFP report is the key event today. The publication may decide if the current USD rebound is to continue. Moreover, there will be a publication of labour data from Canada as well. CAD has lost some of its previous bullish momentum and the reading may decide whether a further tightening of BoC monetary policy is needed. One should also pay attention to speeches of central bankers.