Summary:

• US dollar treads water as investors impatiently NFP release
• AUD remains depressed following an ugly report as for retail sales
• Stocks, bonds muted except for the Spanish IBEX (SPA35) which loses ground

The session across various financial markets has been understandably muffled thus far as investors, economists, analysts are impatiently awaiting the jobs report. As a result, the performance across the FX market which was seen during the Asian session has been broadly unfazed. Therefore, the Australian dollar remains on the back foot following the disappointing retail sales report (the second one on the trot) making any interest rate hikes yet more distant. On the other hand its counterpart in the New Zealand is flat on the day being constantly supported by the stellar employment reading we got earlier this week. In turn the US dollar index is trading close to its breakeven line.

The pound has caught some of momentum following the rosy services PMI which may convince more skeptics with regard to a rate hike delivered by the BoE on Thursday. On the other hand, when we look deeper into the report one may notice that details are not so impressive leaving the GBP exposed in the medium-term. Either way, composite PMI, consisting of services, manufacturing and construction, managed to climb to 55.8, the highest since April. At the time of writing the quid is trading 0.16% higher against the buck.

Looking through stocks and bonds there has been nothing impressive so far as investors seem to hold breath ahead of the key release from the US economy. In effect, the German 10Y bund is unchanged while the US 10Y yield ticks up almost 1bps. Notice that despite the stellar services PMI from the UK (at least on the face of it) the UK 10Y yield is going nowhere suggesting that investors remain skeptic regarding the rosier outlook for the economy, the details of the report seem to accord with such a reaction.

The European equity markets have kicked off the day slightly higher following a stormy session on Thursday which brought more details regarding the US tax bill as well as the new FED chair – Jerome Powell. Having said that the BoE story stole the show sparking a massive slump in the British currency which in turn caused a surge in the UK stock market. Let’s have a look at a technical analysis of the German and UK indices. Since the opening the equity markets across the old continent have barely changed while the Spanish SPA35 draws the most attention. The Spanish index is down 1.2% following an issuance of an arrest warrant for separatists’ leader Carles Puidgemont.

Bitcoin doesn’t slow down its outstanding pace and continues marching higher. Let us recall that the ongoing upward move has been ushered in following an announcement that the CME will launch trading in Bitcoin futures by the end of the year. The price of Bitcoin broke through a round $7000 during Thursday’s session and even downbeat remarks from Credit Suisse’s CEO Tidjane Thiam didn’t spoil the fun. According to him speculation around Bitcoin is the “very definition of a bubble”.

Two labor market reports from the US and the Canadian economies are going to end a tumultuous week in financial markets. Given the FED stuck to its view regarding an interest rate hike in December markets’ focus will turn to the labor market data as investors and policymakers seek some signs of rising wage pressure. On top of this, there will be a reading of non-manufacturing ISM which seems to be of note especially when it comes to the prices subindex.