EQUITIES

 

Shares in Asia-Pacific were mixed in Friday trade. The Japan’s Nikkei 225 led the regional gains as it advanced 1.75%. The South Korea’s KOSPI added 0.65%, the S&P/ASX 200 in Australia rose 0.63%, and the S&P BSE Sensex in India gained 0.34%.

Elsewhere, the mainland Chinese stocks nudged lower as the Shanghai composite slipped 0.15%, and as the Hong Kong’s Hang Seng index shed 0.54%. The Singapore’s Straits Times index was down by 0.20%.

Overnight on Wall Street, the Dow Jones Industrial Average rose 0.37%, to 35,443.82, the S&P 500 gained 0.28%, to 4,536.95 and the Nasdaq Composite added 0.14%, to 15,331.18.

OIL

 

Oil prices eased on Friday, but are headed for a back-to-back weekly gain, supported by signs that the global crude market is tightening, a weaker U.S. currency, and the fallout from Hurricane Ida. The WTI is on track to climb 1.5% for the week, while Brent headed for a 0.3% gain.

The Brent now traded at $73.00 per barrel, while U.S. crude futures traded at $69.85 per barrel.

Overnight, the Brent settled at $73.03 a barrel, and the WTI ends at $69.99 per barrel.

 

CURRENCIES

 

The dollar at month lows against a basket of currencies on Friday and stayed pinned to 92.219 as the risk of an upcoming sub-par U.S. payrolls report weighed on the dollar.

U.S. treasuries also have been cautious ahead of the data release, with the yield on benchmark 10-year Treasury notes was 1.290% compared with its U.S. close of 1.294% yesterday.

 

GOLD

 

Gold prices eked out small gains on Friday as the dollar weakened, with investors awaiting the U.S. jobs data to gauge the Federal Reserve's plans to start tapering asset purchases.

Spot gold rose 0.1% to $1,811.50 per ounce, but for the week, the metal was headed for its first decline in four. The U.S. gold futures meanwhile gained 0.15% to $1,814.20.

Silver rose 0.18% to $23.96 per ounce, while platinum inched 0.36% higher to $997.80. Palladium was flat at $2,402.50.

 

ECONOMIC OUTLOOK

 

Asian share markets were in a cautious mood on Friday as recent disappointing economic indicators continued to weigh on market sentiment, while traders are awaiting U.S. non-farm payrolls for views on the outlook for U.S. Federal Reserve monetary policy.

Traders try to balance weaker economic data out of China against the potential for future stimulus. Investors anticipate that Beijing will accelerate fiscal spending and credit growth as its economic recovery slows, but that such measures will be finely targeted as the U.S. Federal Reserve prepares to taper its own stimulus.

The U.S. Labor Department will release the non-farm payrolls report for August at 1230 GMT today. The payrolls report will colour expectations of the timing and pace about when the Fed might start tapering pandemic-era stimulus and how long it can wait before hiking interest-rates. Fed Chair Jerome Powell last week has suggested an improvement in the employment numbers is the remaining major prerequisite for action.

 

TECHNICAL OUTLOOK

 

[USDJPY]

Important Levels to Watch for Today:

-        Resistance line of 110.225 and 110.470.

-        Support line of 109.735 and 109.490.

Commentary/ Reason:

  1. The dollar traded 0.12% higher at $110.029 yen and is headed for its third weekly gains. The greenback opened higher against the Japanese yen on Friday ahead of the U.S. employment report which is scheduled to be released today.

  2. The U.S. non-farm payroll data is the most important indicator of the economic situation in the U.S., adding that the market expects some 750,000 new jobs to have been created over the last month. If the unemployment rate comes in below expectations, this could cause the U.S. central bank to withdraw its financial stimulus sooner than expected, which could, in turn, push the dollar higher.

  3. The rally in Japan’s Nikkei Index to a 1-1/2 month high meanwhile curbed the safe-haven demand for the yen.

  4. Adding weight to the Japanese yen, Japanese Prime Minister Yoshihide Suga reportedly will step down, Kyodo News reported on Friday, and party sources said he would not run in a ruling party leader race in September, setting the stage for his replacement after just one year in office.

  5. The USD/JPY pair has failed to move beyond the tight range that has lasted for the past two months.

  6. A trade through 110.225 will possibly signal a resumption of the uptrend, given it unable to break the resistance in multiple occasion before, which then followed by the rally around the 110.470 on Wednesday. A move through 109.735 will change the main trend to down.

-       USDJPY