EQUITIES
Shares in Asia-Pacific were mixed on Friday trade. Among the biggest losers regionally are the Shanghai composite and the Hong Kong’s Hang Seng index that both fell around 1.6%, while the S&P BSE Sensex in India declined 0.13%.
Elsewhere, the Nikkei 225 in Japan nudged 0.28% higher and the South Korea’s KOSPI climbed 0.16%. The Singapore’s Straits Times index added slightly at 0.04%, and the shares in Australia rose as the S&P/ASX 200 advanced 0.41%.
Overnight on Wall Street, the Dow Jones Industrial Average rose 0.38%, to 34,633.53, the S&P 500 gained 0.52%, to 4,319.94 and the Nasdaq Composite added 0.13%, to 14,522.38.
OIL
Oil prices pared gains after the OPEC+ postponed a ministerial meeting on oil output policy to Friday. The WTI was on track for a 1.6% rise for the week, while Brent was heading for a 0.5% fall.
The Brent now traded at $75.80 per barrel, and U.S. crude futures traded at $75.26 per barrel.
Overnight, the Brent closed at $75.84, while WTI ended at $75.23 per barrel.
CURRENCIES
The bond and currency markets were on edge ahead of U.S. labour data.
The U.S. dollar index was steady at 92.551, having gained 0.8% over the week so far and cautiously moves as markets await the U.S. data.
The 10-year U.S. yield stood at 1.465%, largely staying below 1.5% in the past couple of weeks, partly influenced by the subsiding inflation expectations.
GOLD
Gold prices held in a tight range ahead of the U.S. nonfarm payrolls data that could sway the Fed’s monetary policy stance.
The spot gold rose to $1,777.70 an ounce and added to $1,778.60 per ounce for gold futures. Previously closed at $1,776.70 and $1,776.80, respectively.
Silver was little changed at $26.175 per ounce, while platinum was steady at $1,089.90. Both were down for the week. Palladium eased 0.1% to $2,766.00, but was set for a second straight weekly gain.
ECONOMIC OUTLOOK
Asian stock markets were mixed on Friday, as investors look ahead to a closely watched U.S. jobs report set to be released later, while monitoring the development of the rising new coronavirus infections and fresh lockdowns.
Chinese shares dropping more than 1% amid speculation the Chinese central bank could begin tightening monetary policy, and some possible unease among overseas investors over President Xi Jinping's warning to foreign powers in a speech to mark his party's centenary.
OPEC+ postponed decision to hold more talks on oil output policy until Friday, as the delay came after the UAE blocked a plan for an immediate easing of cuts and their extension to the end of 2022. Market participants expect an increase in oil output going forward.
Data on the number of Americans filing new claims for unemployment benefits dropped 51,000 to a seasonally adjusted 364,000 in the week ended June 26, more than expected last week, while layoffs plunged to a 21-year low in June. While the U.S. manufacturing showed factory activity slipping to 60.6 last month from 61.2 in May.
Investors now eye Friday's much-anticipated employment report. Monthly nonfarm payroll data, due out later today, is expected to show a 700,000 increase in June, and wage growth expectation of around 0.4%. A robust upside surprise could lead the U.S. Federal Reserve to adjust its timetable for tapering its securities purchases and raising key interest rates.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 111.802 and 112.050.
- Support line of 110.999 and 110.750.
Commentary/ Reason:
The dollar rose 0.05% to 111.573 yen, hitting its highest level since March last year.
The dollar has climbed about 0.7% against the yen this week, as investors have re-assessed short dollar positions following months of strong data and a hawkish shift in tone from the Fed.
The Japanese yen was weighted against the U.S. dollar after the release of economic indicators in the U.S. boosted the greenback. The stronger-than-expected U.S initial claims report and the 42-year high of manufacturing prices was supportive of the dollar.
The yen also was undercut by a hawkish speech by Chinese President Xi in which he saber-rattled on the issue of Taiwan and fuelled geopolitical concerns for the region.
However, the decline in the 10-year T-note yield to a 1-week low were negative for the dollar.
The focus for next direction for the pair this week is on the U.S. non-farm payrolls data and its implication for rates, due later today. Signs of strength in the labour market could add pressure on the Fed to act, and the prospect of higher rates could lift the dollar, while it is vulnerable if the data misses expectations.
