MNI US OPEN: Dollar Under Pressure Ahead Of Jobs Report

NEWS

MNI US Payrolls Preview: Watching Implications for Feb FOMC

Consensus is very similar to what it pencilled in for last month’s report, before payrolls came in stronger but the u/e rate increased more than expected as participation fell.

US/RUSSIA (MNI): Putin Won't Leave Ukraine, But Ready for Talks w/US - Kremlin

Wires carrying comments from the Kremlin stating that President Vladimir Putin will not withdraw Russian troops from Ukraine, but is ready for talks with the US. Asked in relation to Biden comments if Russia is ready to leave Ukraine, Kremlin spox Dmitri Peskov states, 'the special operation continues'.

EU/UK (MNI): Irish FM-Landing Zone on NI Protocol Possible in Next Few Weeks

Wires carrying comments from Irish Foreign Minister Simon Coveney stating that a 'landing zone' on the Northern Ireland protocol is possible 'in the next few weeks'. Coveney, in line with positive comments from EU officials in recent days, says that 'trust is growing' in protocol negotiations between the EU and UK. Adds that as of yet the two sides, 'haven't made any major breakthroughs on [the] protocol'.

ITALY (MNI): Italy Says May Not Make Dec Deadline For EU Funds

Italy may not meet all of the Dec 31 targets and milestones key for unlocking the next EUR19 billion in EU funds from the NextGenerationEU programme, European Affairs Minister Raffaele Fitto said on Friday, adding that it was more important to consider the country’s overall progress towards objectives than over-focus on timings. His comments came after MNI reported on Thursday that Italy had informally asked European officials for flexibility on the December targets.

OIL (MNI): Poland Remains Price Cap Hold Up Friday

G7 nations are “very close” to an agreement on a Russian oil price cap of $60/bbl with an adjustment mechanism to keep the cap at 5% below the market price according to various news reports from G7 officials. A deal is expected to be finalized in the coming days or Monday at the latest.

CHINA (MNI): China Must Target Growth Above 5%, Refine Covid Controls

(MNI) Beijing - China’s policymakers must aim for growth of above 5% in 2023 if its long-term growth goals are to be hit, but the success of more stimulatory fiscal and monetary policy in reviving the economy hinges on Beijing’s ability to deliver a more balanced approach to Covid controls, policy advisers and economists said.

CHINA (MNI): China's Growth "Slower Than Expected" - Yi Gang

MNI (Beijing) - China’s growth was “slower than expected” but boosting growth is now the priority, People’s Bank of China Governor Yi Gang told a Bank of International Settlements conference on Friday.

JAPAN (MNI): BOJ Faces JPY28.6 Trln Loss If Rates Rise 1%

Bank of Japan Deputy Governor Masayoshi Amamiya said on Friday the BOJ would likely have unrealised losses of JPY28.6 trillion on its government bond holdings if interest rates rise 1%. Amamiya told lawmakers that the conduct of BOJ’s monetary policy will not be affected by rising unrealised losses. He said the BOJ needs to maintain easy policy to firmly support the economy amid high uncertainties, and to achieve its price stability target accompanied with wage hikes.

AUSTRALIA (MNI): Another 25bp Hike, Eyes on Guidance Tweaks

The Reserve Bank of Australia is expected to lift rates by 25bp on Tuesday, but the focus will be on any tweaks to forward guidance that may signal the timing of a pause in its tightening campaign next year. A hike to 3.1% would lift rates to their highest level since late 2012 and cap a run of eight consecutive rate increases that would have delivered a cumulative tightening of 300bps since May, with the impact evident in falling house prices and depressed consumer sentiment.

AUSTRALIA (MNI): Wary Of 'New World' Of Variable Inflation - RBA Lowe

Reserve Bank of Australia Governor Philip Lowe warned more elevated inflation is the first big test of central bank credibility, and it must be passed to manage policy in a new world of more variable inflation. Lowe said policymakers would have to deal with more year-on-year variation in inflation than at any point over the past 30 years, making the credibility of the monetary policy regime "more important than ever."

DATA

EUROZONE DATA (MNI): PPI Oct Contraction Masks Further Core Uptick

• EUROZONE OCT PPI -2.9% M/M (FCST -2.0%); SEP +1.6% M/M
• EUROZONE OCT PPI +30.8% Y/Y (FCST 31.7%); SEP +41.9% Y/Y

Factory-gate inflation cooled more than anticipated in the October data, contracting by -3.9% m/m in a significant turn-around from +1.6% m/m recorded in September. The annualised PPI rate slowed by over 11pp to +30.8% y/y, distancing further from the August peak. Falling energy-sector prices drove the decline, down -6.9% m/m alone. Yet the October print should be taken with only cautious optimism. Core PPI showed no relief; ex-energy PPI was up +0.5% m/m.

FED RESERVE BALANCES -$117B TO $3.052T IN NOV 30 WEEK (MNI)

JAPAN DATA (MNI): Japan's Q3 Revised GDP Seen Little Changed; Higher Capex

Japan's economy contracted at slower pace than initially estimated in the July-September quarter as capital investment was expected to be stronger than first estimated, economists predicted in the wake of a key government survey. The median forecast by six economists for revised Q3 GDP is -0.3% q/q, or an annualized -1.1%, compared with the preliminary estimate of -0.3% q/q, or an annualized -1.2%. The forecasts ranged from -0.1% to -0.3% q/q, and -0.4% to -1.2% annualized.

FX SUMMARY: A Busy Morning Session for FX

• All the action was in FX during the morning European session.
• The USD tumbled and extended losses across the board, while the Yen continued its ascent across G10s.
• It is another a 197 pips range for the USDJPY, broke below 134.00, to print a 133.63 low, but is now back at 134.20.
• USDCHF continues to trade at its lowest level since April.
• Small support will be seen at 0.9324, followed by 0.9287.
• Traded as low as 0.9337 so far today.
• Cable tested just short of the 1.2300 handle, 1.2298 is the high for the session.
• Other mover has been the Kiwi, extending gains against the Aussie.
• The pair now eye the March low at 1.0615, only managed a 1.0643 and off its low at 1.0657 at the time of typing.
• Looking ahead, ALL EYES are on NFP and AHE.
• Speakers, sees ECB Guindos, Nagel and Fed Barkin, Evans to end the week.

BOND SUMMARY: Treasuries Remain Near Recent Highs Ahead of Payrolls

• Bunds and gilts are higher this morning, while Treasury futures are only a little below the highs seen yesterday of 114-24+, the high since mid-September. Markets are looking ahead to this afternoon's US labour market release.
• Payrolls data likely to have more impact on pricing for the 1st February FOMC meeting than the December meeting (which is looking likely to see a 50bp hike). There is around 86bp priced cumulatively by February. Chair Powell alluded to a 100k pace of payrolls growth as being sustainable, but consensus is looking for twice that number today (200k).
• Post-payrolls we will hear from the Fed's Barkin and Evans (and potentially more on as-yet-unannounced media interviews).
• We will also have another BOE operation to sell its holdings of its financial stability portfolio of long-dated gilts and linkers.
• TY1 futures are up 0-1+ today at 114-21 with 10y UST yields up 2.0bp at 3.528% and 2y yields down -2.3bp at 4.208%.
• Bund futures are up 0.40 today at 142.83 with 10y Bund yields down -2.5bp at 1.785% and Schatz yields down -5.0bp at 1.916%.
• Gilt futures are up 0.41 today at 105.95 with 10y yields down -2.2bp at 3.075% and 2y yields down -0.7bp at 3.216%.

EQUITIES: Thursday Gains Reinforce Bullish S&P E-Minis Trend

EUROSTOXX 50 futures trend conditions remain bullish and the contract traded to a fresh cycle high Thursday. This maintains the uptrend that started in early October and confirms an extension of the price sequence of higher highs and higher lows. The recent break of 3810.00, Aug 17 high, also strengthens the case for bulls. 4000.00 has been pierced, this opens 4049.50 next, Feb 23 high (cont). Initial firm support is 3840, Nov 17 low. S&P E-Minis remain in an uptrend and Thursday’s gains reinforce a bullish theme. Gains this week have resulted in a break of resistance at 4050.75, the Nov 15 high. This confirms a resumption of the uptrend and marks an extension of the price sequence of higher highs and higher lows. Sights are on 4146.63, a Fibonacci retracement. On the downside, key short-term support has been defined at 3912.50, the Nov 17 low.

• Japan's NIKKEI closed lower by 448.18 pts or -1.59% at 27777.9 and the TOPIX ended 32.48 pts lower or -1.64% at 1953.98.
• Elsewhere, in China the SHANGHAI closed lower by 9.327 pts or -0.29% at 3156.144 and the HANG SENG ended 61.09 pts lower or -0.33% at 18675.35.
• Across Europe, Germany's DAX trades lower by 27.99 pts or -0.19% at 14464.87, FTSE 100 lower by 36.52 pts or -0.48% at 7523.5, CAC 40 down 31.63 pts or -0.47% at 6723.34 and Euro Stoxx 50 down 13.74 pts or -0.34% at 3971.19.
• Dow Jones mini down 44 pts or -0.13% at 34381, S&P 500 mini down 5 pts or -0.12% at 4076, NASDAQ mini down 26.25 pts or -0.22% at 12034.25.

COMMODITIES: Gold Trades Above 1800 Handle, Targets 1807.9 Next

Trend conditions in WTI futures remain bearish and this week’s gains are still considered corrective. Monday’s move lower resulted in a break of $74.96, Sep 28 low. This confirmed a resumption of the downtrend and has opened $73.38, a Fibonacci projection and the $70.00 psychological handle. MA studies are in a bear mode condition, highlighting the current trend direction. Resistance is at $83.81, the 50-day EMA. Short-term trend conditions in Gold remain bullish and this week’s gains reinforce this condition. Yesterday’s rally resulted in a break of $1786.5, the Nov 15 high and a bull trigger, confirming a resumption of the uptrend. $1800.0 has also been cleared and sights are on resistance at $1807.9, the Aug 10 high. On the downside, key trend support has been defined at $1729.0, the Nov 23 low.

• WTI Crude down $0.37 or -0.46% at $80.81
• Natural Gas down $0.15 or -2.21% at $6.588
• Gold spot down $0.96 or -0.05% at $1802.62
• Copper down $1.05 or -0.28% at $380.55
• Silver up $0.01 or +0.04% at $22.7865
• Platinum down $1.59 or -0.15% at $1042.54