Good morning and happy Friday.
To the scoreboard:
Dow: 22,775.39 +113.75 (+0.50%)
S&P 500: 2,552.07 +14.33 (+0.56%)
AUD/USD: 0.7794 -0.0070 -0.89%
ASX200 SPI futures (December contracts): 5,670 (+36)
1. Here comes the USD: The US dollar index is trading at a seven-week high this morning, boosted by a run of good data points this week combined with more dovish comments from the ECB and doubts around the future of British Prime Minister Theresa May. That pushed the pound sharply lower and the euro also fell, with the USD index potentially on the cusp of another break higher:
2. US stocks stay on the charge: The S&P500 posted its eighth straight session of gains, and stocks rose globally with Spain’s IBEX index climbing by 2.5% to offset some of the falls earlier in the week. The strong lead means today could finally be the day for the ASX — it’s been unable to break higher in recent sessions but futures traders have marked the local index up sharply before this morning’s open.
3. Aussie back below US78 cents: Strength in the US dollar extended to the commodity block currencies, with the Kiwi dollar and Canadian loonie also falling. Yesterday’s bad miss in retail sales added to the downside pressure for the AUD in overnight trade, and this morning it closed below US78 cents for the first time since July:
4. It’s all about payrolls: Major moves in global markets will be driven by the release of US non-farm payrolls later tonight. The extent of the impact from the recent hurricanes has Wall Street analysts split on what the outcome of tonight’s data release will be, with the market consensus for payrolls to climb by 80,000 and unemployment to hold steady. Benchmark US 10-year bond yields are edging towards a three-month high ahead of the release.
5. Iron ore awakens: And prices immediately fell again, to a three month low. Spot markets were active for the first time this week as the Chinese holiday continues. Benchmark crude oil rose by 2% after comments from Saudi Arabia and Russia about limiting production next year. Base metals were up, as copper rose sharply while zinc and nickel were also higher.
6. PIMCO stays cautious: The $US1.6 trillion asset manager is advising clients to be wary of complacency, even as the global growth backdrop continues to strengthen. In this slide-show presentation provided to Business Insider, PIMCO provides detail on specific areas where investors should exercise caution.