Intraday Market Thoughts

CAD Jobs Disappoint, Onto US, New Premium Trades

by Patrik Urban
Dec 2, 2011 12:46

Merkel calls for a fiscal union; Swiss retail sales declined; UK construction PMI lower but still expanding; Eurozone PPI lower; Canadian labor market data disappointed. Focus turns to NFP and the unemployment rate. Pre-US Jobs Premium Trades are below.

The USD is mixed today but trades within narrow ranges. The relative strength winners are NZD and AUD while JPY is the biggest loser. European equity indices trade higher by about 1.5%.

German chancellor Angela Merkel who spoke to the German parliament today called for an enforceable fiscal union and again reiterated her dissenting stance towards the introduction of Euro bonds. She maintained her attitude that only budget discipline and lower government borrowing could solve the root of the crisis. France and Germany will propose changes for the EU on Monday.

Swiss fundamentals are firmly on the deterioration path as retail sales declined in October -0.2% y/y after dropping -1.4% in September. CHF is weaker against the Euro trading around 1.2350.

UK construction PMI declined in November to 52.3 from 53.9. Despite the slowdown it remained in the expansionary territory.

Eurozone PPI rose 0.1% in October, less than 0.3% seen a month earlier. On annual basis PPI rose 5.5% which is considerably lower compared to previous 5.8%. The ECB meets next Thursday and the probability that rates will be lowered is high.

FRIDAY PREMIUM TRADES ARE HERE: Nonmembers click here to join

The loonie declined sharply after Canada lost 18.6K jobs in November after -54K in October. Market expected employers to add 18K jobs. The unemployment rate ticked up to 7.4% from previous 7.3%. USDCAD rose from 1.0096 to 1.0140 immediately after the release.

The NY session will bring the eagerly awaited labor market data at 8:30 am ET. November NFP is expected to rise to 126K from previous 80K and the unemployment rate is seen steady at 9.0%.

Wednesday's ADP figure exceeded expectations as it printed a solid 206K growth in private jobs which was the best result since 3/2011 and nearly double of the gain seen in the previous month. Positive surprise that would fuel risk appetite is therefore likely to a degree. However, keep in mind that jobless claims rose back above 400K and that the employment component of ISM manufacturing decreased to 51.8 from previous 53.5.


Latest IMTs