3rd July 2020 - A strong US jobs report (Non-Farm payrolls) lifted sentiment overnight


Good Morning,

Market Headlines

A strong US jobs report (Non-Farm payrolls) lifted sentiment overnight, although continued rise in the number Covid cases pulled back equity market gains. The S&P500 closed marginally up 0.5%, the NASDAQ gained 0.6% to a fresh record high. US 2yr treasury yields initially rose from by 0.01% to 0.17% post NFP numbers, but retraced to 0.15%, while the 10yr closed at 0.71%. On the Commodities front, Brent oil futures gained 1.8% to $42.80, copper gained 0.8%, iron ore also rose by 0.3% to $99.75, and gold finished up 0.2%.

Currencies

US Dollar Index remained relatively unchanged with a 0.1% gain for the day.

EUR initially rose from 1,1260 to 1.1303 but retraced post the NFP numbers to 1.1223.

USD/JPY ranged between 107.35 and 107.72.

AUD spiked to 0.6952 after the jobs report then dropped to 0.6902 and is now trading at 0.6925.

NZD ranged between 0.6500 to 0.6537

AUD/NZD fell from 1.0660 to 1.0607.

AUD Thoughts

A strong US jobs report (Non-Farm payrolls) helped market sentiment remain buoyant overnight and we expect an overall quieter period ahead as markets wind down for the July 4th holiday in the US. Domestically we have May Australian Retail Sales out today at 11.30 AEST today and expected to show a strong rebound form -17.7% in April to May f/c +16.3%.

AUD/USD remained well supported overnight and is currently offering interest around 0.6950/60 while demand should grow if we dip back under 0.6900 to the 0.6880 region.

Event Risk Data Today

Australia: May retail sales expected to show a strong rebound form -17.7% in April to May f/c +16.3%.

China: Caixin China services PMI expected to post consecutive readings in excess of the 50 expansion/contraction threshold (market f/c: 53.2).

Asia: Markit services PMIs will be released for Japan, Singapore and India.

Europe: Markit services PMIs will be published for the Eurozone, UK and Germany.

US: Independence Day public holiday is observed today given the 4th of July falls on Saturday.

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