Market Risk Sentiment Improves, Focus on US Employment Data This Week
Market Overview
The market is showing signs of improved risk sentiment as the week begins. Although concerns over Trump tariffs and political instability in France remain, the following factors are supporting the market:
- US Stock Market: The Nasdaq and S&P 500 indexes have hit new highs, driven by tech stocks. There is strong optimism regarding the year-end shopping season.
- European Stock Market: The German DAX index has also reached new highs, supported by expectations of ECB rate cuts.
- Nikkei Stock Average: The Tokyo market is also showing solid performance, with the Nikkei gaining as much as 900 points.
Key Focus: US Employment Data
The focus this week is on Friday's US Nonfarm Payrolls (NFP), but prior to that, the October US JOLTs Job Openings (to be released at 24:00 Japan Time) is the key data point to watch.
- Market Forecast: 7.519 million (up from the previous 7.443 million).
- Background: Yesterday’s upward revision of the US Manufacturing PMI and stronger-than-expected ISM Manufacturing PMI data suggest that the US economy remains resilient.
- If the US economy continues to show strength, we can expect a reaction of rising US Treasury yields and a stronger US dollar alongside a weaker yen.
Upcoming Overseas Market Events
Economic Data:
- Turkey: Consumer Price Index (CPI), Producer Price Index (PPI) for November.
- Switzerland: Consumer Price Index (CPI) for November.
- France: Fiscal balance for October.
- South Africa & Brazil: GDP (Q3).
- Mexico: Unemployment rate for October.
Speech Events:
- ECB: Vice President Luis de Guindos and Governor Panetta (Italy) are scheduled to speak.
- FRB: Governor Waller and Chicago Fed President Goolsbee will give speeches.
- Earnings Reports: Salesforce is the key earnings release to watch.
Trade Strategy
- USD Movement:
If the US JOLTs Job Openings data exceeds expectations, a stronger dollar is likely.
Given the positive ISM Manufacturing PMI data, there is an expectation that further positive employment-related data will follow. - EUR/USD:
With political uncertainty in France still a concern, the euro continues to face downward pressure.
A short-sell strategy targeting any short-term recoveries remains effective. - USD/JPY:
If US Treasury yields rise, dollar buying could push USD/JPY towards the 150 yen level.
However, if stock market corrections trigger risk-off sentiment, we could see a rebound in the yen. - GBP/USD:
As UK economic indicators continue to show weakness, a bearish view on the pound is warranted.
Wait for a rebound to trade the pound in line with the movement of the US dollar.
Conclusion
Today, the October US JOLTs Job Openings will be the key catalyst for USD movement. It’s wise to wait for the data release, confirm the market reaction, and then act. Additionally, keep an eye on any stock market corrections in the US and Europe, as these could trigger risk-off movements and affect currency pairs accordingly.
