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Market attention shifts to Non-Farm Payroll data


US stocks declined lower on Thursday, remaining under pressure and extended their post-Fed slide amid concern that a deeper recession could be possible as the Federal Reserve expected to hold rates at a higher level for longer to tame inflation. The Soaring government bond yields and risk-off market mood has exerted bearish pressure on the equity markets, as the 10-year US Treasury yields accelerated to 4.15% after hawkish guidance from the Fed yesterday.

On the economic data side, the US ISM Services PMI declined to 54.4 in October, which came in below the market expectation of 55.5 but failed to drag down the US dollar. Markets focus now shifts to the release of the US Nonfarm Payrolls report in October, which will provide cues about the Fed’s intentions toward December’s monetary policy. In the Eurozone, the divergence between the Fed and the European Central Bank given the dovish stance of the ECB’s governor Christine Lagarde could keep weighing on the euro, as Lagarde emphasised the meeting-by-meeting approach last week.

The benchmarks, S&P 500 and Dow Jones Industrial Average both declined lower on Thursday as the S&P 500 saw its fourth straight decline and was dragged down by big tech companies as Treasury yields climbed. The S&P 500 was down 1.1% daily and the Dow Jones Industrial Average also dropped lower with a 0.5% loss for the day. Six out of eleven sectors in the S&P 500 stayed in negative territory as the Information Technology sector and the Communication Services sector are the worst performing among all groups, losing 3.00% and 2.83%, respectively. The Nasdaq 100 meanwhile dropped the most with a 2.0% loss on Thursday and the MSCI World index was down 1.3% for the day.

Main Pairs Movement

The US dollar advanced higher on Thursday, extending its post-Fed rally and reached fresh weekly highs against most of its major rivals during the US trading session amid souring market sentiment. The greenback remains underpinned by Fed Chair Jerome Powell’s hawkish commentary as he said that rates would be higher than September’s forecast. Meanwhile, the release of the US NFP data on Friday will provide some clarity for further Fed’s monetary policy action.

GBP/USD tumbled heavily on Thursday with a 2.04% loss after the cable extended its slide to two-week lows below the 1.1160 mark amid BoE’s dovish language. On the UK front, the Bank of England’s Governor Bailey said that rates would be lower than market expectations and expects a long-lasting recession will hit the UK. Meanwhile, EUR/USD continued to be controlled by the bears and sank into the 0.9740 area amid a stronger US dollar and the ECB/Fed divergence. The pair was down almost 0.70% for the day.

Gold retreated with a 0.35% loss for the day after recovering some of its daily losses towards the $1,630 area during the late US trading session, as the hawkish commentary by the Fed lifts the greenback and weighs on Gold prices. Meanwhile, WTI Oil declined lower with a 2.03% loss for the day as crude oil prices retreat from the $90.00 area to levels near the $88.00 area.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
GBPConstruction PMI (Oct)17:3050.5
EURECB President Lagarde Speaks17:30 
USDNonfarm Payrolls (Oct)20:30200K
USDUnemployment Rate (Oct)20:303.6%
CADEmployment Change (Oct)20:305.0K
CADIvey PMI (Oct)22:00