Top Things to Know Today - page 27
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Italy criticises ECB for nearly doubling Monte Pashci capital shortfall estimate
Italy's economy minister Pier Carlo Padoan, speaking with financial newspaper Il Sole 24 Ore
- Padoan says the ECB's new capital target was the result of a "very rigid stance" by the ECB
- "It
would have been useful, if not kind, to have a bit more information
from the ECB about the criteria that led to this assessment"
Reuters have moreEUR/USD: Surges, Currently Maintaining Break of Resistance
EUR/USD made a strong move to the upside between the U.S. close and Tokyo open yesterday, with the pair rising as high as 1.06536, the best level since mid-December. There appeared to be no news associated with the event and the pair did quickly fall back from the high.
However, strength is currently being exhibited and EUR/USD is holding above resistance at the November/December lows near the 105064/1.05183 zone. Currently, EUR/USD is trading at 1.0560, up 0.68% over Thursday’s U.S. close.
Sustaining the recent gain is required to improve the near-term outlook for EUR/USD. The next upside target is at the mid-December high at the 1.06701 level, which was nearly matched as a result of the latest strong move higher.
On the downside, support is at the December 22 high at 1.04994. Maintaining above this level is required to keep the bullish implications of the recent price action intact.
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Growth in Chinese Manufacturing, Services Slows in December, Official PMI Data Show
China’s economy expanded at a slower but steady pace in December, a sign the government’s efforts to curb surging asset prices were beginning to hamper growth.
Beijing’s official manufacturing purchasing managers’ index (PMI) edged down to 51.4 in December from 51.7 the previous month, the National Bureau of Statistics reported Sunday. Economists in a median estimate forecast a PMI of 51.6.
A reading above 50 points to expansion in economic activity, while a reading below that level signals contraction. December was the fifth consecutive month of growth for Chinese manufacturers.
The official manufacturing PMI covers trends at large and state-owned companies. The Markit/Caixin PMI report, a private measure of smaller-scale manufacturing activity, will be released on January 3.
China’s non-manufacturing PMI, a gauge of service activity, weakened to 54.5 in December from 54.7, the statistics bureau said in a separate report. China’s services sector has been in expansion mode since the global financial crisis. Services have been at the centre of Beijing’s growth policy aimed at transforming China into a consumer-oriented economy. Services growth has also helped to offset persistent weakness in exports at a time of dismal economic growth.
The three seasonal trades to watch in January of 2017 (Gold, EUR & USD)
German December Unemployment Declines 17,000
German unemployment declined 17,000 in December following a revised decline of 6,000 the previous month, which was originally reported as a fall of 5,000.
This was the fastest rate of decline since January 2016 and there has not been a monthly increase in the jobless total since October 2015.
The unemployment rate remained at 6.0%, the lowest rate since re-unification and employment increased to a fresh record high. The ILO unemployment rate at just above 4.0% remains below the US unemployment rate.
The decline in unemployment remains all the more impressive given that the labour market needs to absorb a high number of migrants with 425,000 refugees registered as job seekers in December.
Overall confidence in the labour market will remain strong in the short term. Confidence in the jobs market and gains in employment will support consumer spending. There will also be expectations that falling unemployment will put upward pressure on wages growth, which will tend to increase inflationary pressure.
The Euro was unable to gain any support from the data as underlying confidence remained weak with markets still looking to test the downside with EUR/USD dipping towards 1.0400. There was a response in the bund market with further net selling as the 10-year futures contract dipped below the 164.00 level and fell close to a full point on the day as higher inflation data also had a significant impact. The DAX index moved into negative territory for the day.
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Deutsche Bank on what to look for in the FOMC Minutes on Wednesday
The U.S. dollar stepped further away from a 14-year peak against a basket of major currencies on Thursday, extending weakness from the prior session when Federal Reserve minutes pointed to a number of risks that could change the path for interest rates.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped to as low as 101.73, the weakest in three weeks, just two days after it had hit a 14-year high of 103.82. It was last at 102.48 by 6:00AM ET (11:00GMT), down less than 0.1%.
Against the yen, the dollar was down around 0.45% at 116.70, after falling to as low as 115.59.
Meanwhile, the euro tacked on 0.1% against the greenback to 1.0499, extending its recovery from the 14-year trough of 1.0339 set on Monday.
2. China's yuan soars against the greenback
China's yuan soared against the U.S. dollar on Thursday, following a sharp rise in the offshore spot rate as China worked to stem capital flows and stabilize the currency ahead of Donald Trump's inauguration as U.S. president and the Lunar New Year.
The offshore yuan gained 0.45% against the dollar and traded at 6.8345 after rising by more than 1% to 6.7854 earlier.
China has been making great efforts to stabilize its currency ahead of U.S. President-elect Donald Trump's inauguration and the Chinese New Year later this month by taking actions that affect both onshore and offshore markets.
3. U.S. service sector, jobs-related data ahead
Key U.S. reports later in the day should provide further evidence if the world’s largest economy is strong enough to withstand higher borrowing costs in the months ahead.
ADP payrolls data is released at 8:15AM ET (13:15GMT). Economists expect 170,000 private sector payrolls, just below the 178,000 consensus for total December nonfarm payrolls, expected on Friday.
Weekly jobless claims are released at 8:30AM ET, while Markit services PMI is released at 9:45AM ET and ISM non-manufacturing data is released at 10:00AM ET.
Traders continued to price in two rate hikes this year and slightly less than a 50% chance of a third, according to Investing.com's Fed Rate Monitor Tool.
4. Oil holds steady ahead of weekly U.S. stockpile data
Oil prices held steady on Thursday, as market players awaited fresh weekly information on U.S. stockpiles of crude and refined products.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 11:00AM ET (16:00GMT) Thursday, amid analyst expectations for a decline of 2.2 million barrels. The report comes out one day later than usual due to the holidays.
After markets closed Wednesday, the American Petroleum Institute said that U.S. oil inventories fell by 7.4 million barrels in the week ended December 30.
U.S. crude was up 3 cents, or less than 0.1%, at $53.30, while Brent dipped 2 cents to $56.44 a barrel.
5. Global stocks struggle for gains, Dow to try again for 20K
U.S. stock markets were struggling for direction on Thursday morning, with the Dow remaining within sight of the closely-watched 20,000-level before the release of key U.S. data.
European equities fluctuated around the unchanged mark in choppy morning trade, while London's FTSE100 rose to a fresh record-high.
source
Friday January 6th, 8:30 a.m.
Credit Agricole: Our US economist looks for firm US economic data this week with NFP predicted to rise by 185K and the unemployment rate to tick upward to 4.7%
Goldman: We are in line with consensus across the board for payrolls on Friday, where we expect 180k on the headline and the unemployment rate to tick up to 4.7%.
UBS: UBS forecasts employment growth in December to be little changed from its November pace, with payrolls up 170k (prev. 178k), private payrolls up 160k (prev. 156k), and no change in the unemployment rate (4.6%) after November's drop. We think the swing from unusually warm weather in Oct.-Nov. to typically colder temperatures in Dec. has held back payrolls in the latter month.
Danske: We estimate non-farm payrolls increased by 170,000 in December in line with the recent trend and more or less in line with the consensus of 178,000. We estimate private services was the main contributor to job growth with 150,000 new jobs. After four months in decline, we estimate manufacturing employment was unchanged in December as manufacturing activity has recovered. Construction employment probably increased 8,000 in December. We estimate the unemployment rate rose to 4.7% and that average hourly earnings increased 0.2% m/m, implying a small increase in the wage growth rate of 2.6% y/y.
BofA Merrill: We look for a trend-like 175,000 gain in nonfarm payrolls. We expect 170,000 of this gain to come from the private sector and only 5,000 to come from the government sector. We think there is scope for the labor force participation rate to inch back up to 62.8% from 62.7%, and as a result, for the unemployment rate to move back up towards 4.8%. Smoothing through the volatility of wage growth in the past couple of months, we look for average hourly earnings to gain a trend-like 0.2% mom after a 0.1% mom contraction in November. This would push the year-over-year rate up to a healthier 2.7% from 2.5%.
Nomura: We forecast that nonfarm payrolls increased by 175k in December, following a steady gain of 178k in November. We expect that private payrolls gained 170k, implying that the public sector added 5k workers to its payrolls. Incoming business and consumer surveys suggest healthy hiring and job market conditions. In addition, initial and continuing claims data imply that involuntary layoffs remain quite low and firms are eager to retain workers. On the manufacturing sector, payrolls have declined for four consecutive months but the declines have slowed in recent readings. Given the better optimism from manufacturers, we expect manufacturing payrolls to remain unchanged in December. In addition, we expect that unemployment rate increased slightly to 4.7% in December following a 0.3pp decline to 4.6% in November.
Barclays: For the December employment report, we look for nonfarm payrolls to rise by 175k. We expect 165k of these gains to come from the private sector – particularly service-providing employers – with government payrolls adding the remaining 10k. Initial and continuing jobless claims have continued to trend lower, bolstering our confidence that labor demand remains solid. We expect the unemployment rate to rise 0.1pp to 4.7%.
SEB: We forecast 190k for total payroll growth, 180k on private payrolls, 4.7% on the unemployment rate, and 0.3% on average hourly earnings.
CIBC: Look for non-farm payrolls to have increased by 165K during the final month of 2016, which is in line with our medium-term forecast for average monthly employment gains. While that’s a bit cooler than the recent trend, it’s still well ahead of the roughly 100K needed to keep pace with population growth. The unemployment rate will, however, move a couple of ticks higher on the back of a rebound in labour force participation. Wage increases should also bounce back into positive territory, after declining in November for the first time in almost a year.
UOB: The key US data focus falls on Friday (6 Jan) when we get the US December Labor report with the focus on non-farm payrolls (which we expect to surprise higher at 250,000 from November’s 178,000 and the unemployment rate (which also could ease lower to 4.5% from 4.6% in Nov.
US intel report says Putin directed cyber campaign aimed at helping Trump
This should be fun, US intelligence agencies on one side, on-the- lam accused rapist Assange and WikiLeaks on the other.