A mixed overnight session saw the Hang Seng rise +1.5%, while the Nikkei fell -0.8%, as everyone awaits the NFP numbers. The risks are skewed toward a weaker print following the ISM and jobless claims data, which were on the softer side of expectations. Consensus expects a 220k print, reflecting a rebound from the strikes and storm impact of the previous number (12k). The unemployment rate is projected at 4.1%. However, the two-month average payrolls would only be 131k, and as Fed Governor Waller noted, "The employment report may have misled payroll data; I will downplay a strong print."
In other news, oil took the spotlight after OPEC’s decision to postpone adding supplies for the third time. WTI opens at $68.50. I am keeping a close eye on USD/JPY. The relationship between PM Kishida and President-elect Trump is likely to influence the currency, while rising JGB yields in Japan and a worsened outlook for the US budget deficit could prompt Japan’s large pension funds to adjust their investment strategies. This shift could impact demand for USD/JPY, potentially altering the dynamic of the carry trade, which now seems to face limited upside.
In other markets, Bitcoin fell 1% to $98,056.95, Ether rose 1.3% to $3,910.50, the yield on 10-year Treasuries stands at 4.17%, and spot gold rose 0.3% to $2,639.15 an ounce.
It’s all about the NFPs today...
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