Investors Expecting Strong U.S. Jobs Report

January 7, 2011

EUR/USD slid 0.2% and below the key $1.3000 level ahead of the U.S. monthly labor force survey.  Analysts revised up their employment forecasts this week to nearly 200K, and some whisper numbers are approaching 300K.  The unemployment rate is seen edging down from November’s 9.8%. 

The dollar otherwise shows gains of 0.2% against the yen and 0.1% versus the Australian dollar and sterling.  The greenback is unchanged against the yuan and Canadian dollar, off 0.3% relative to the Swiss franc and 0.1% lower against the kiwi.

Equities fell 2.8% in Indonesia, 2.4% in India, 1.4% in Thailand, 1.1% in Taiwan and 0.4% in Australia, the Philippines and Hong Kong.  The Nikkei firmed 0.1%.  In Europe, stocks are down 0.7% in France, 0.6% in Britain and 0.2% in Germany.

There has been a further retreat in gold prices of 1.0% to $1358.00.  The yellow metal has lost 4.4% in the first week of 2011.  Oil prices are 0.4% today at $88.74 per barrel.

Ten-year sovereign bond yields rose three basis points each in Germany and Britain but eased by two basis points in Japan.

Peru’s central bank surprised pundits with yesterday’s timing of a 25-basis point key interest rate hike to 3.25%.

German retail sales fell 2.4% in November and were 2.0% lower than a year earlier.  The results were worse than forecast, needless to say.  Residential construction prices were 1.6% higher in November than a year earlier.  Germany’s construction purchasing managers index was hammered by bad weather in December, falling to 36.0 from 53.8 in November.

Germany recorded a smaller seasonally adjusted trade surplus of EUR 11.8 billion in November after EUR 14.2 billion in October.  The October-November average surplus of EUR 13.0 billion compares to means of EUR 13.4 billion in 3Q10 and EUR 12.1 billion in 2Q10.  Germany’s unadjusted current account surplus of EUR 12.0 billion was similar to October’s EUR 12.1 billion.  The year-to-date current account surplus of EUR 110.4 billion is 9.6% wider than in January-November 2009.  Merchandise exports grew 0.5% on month and 21.7% on year in the latest reported month.

The French trade deficit widened 4.3% on month to EUR 3.87 billion in November.  Exports were 14.6% greater than a year earlier. 

Euroland real GDP growth in the third quarter of 2010 was revised down a tenth to 0.3%.  On-year growth remained at 1.9%, however.  Downward quarterly revisions were made to the growth rates of France, Greece, Portugal, and Belgium.  In comparisons of 3Q to 2Q, personal consumption only firmed 0.1%, and investment fell by 0.3%.  Exports (1.9%) outpaced imports (1.5%).

The unemployment rate in the euro area held steady for a second consecutive month at 10.1% in November.  Such had been at 10.0% previously and was 9.9% in November 2009.

Czech industrial production rose 2.0% on month and 15.9% on year in November.  Minutes from that country’s central bank meeting in late December revealed a 6-1 vote in favor of an unchanged 0.75% key interest rate as officials saw balanced inflationary risks.  Industrial output in Hungary jumped 4.3% on month and 14.5% on year in November.  Norwegian industrial production fell by 2.8% in November and 4.7% on year.  Norway also released M2 money figures (up 5.7% on year in November) and retail sales (up 2.0% on month and 7.9% on year in November).

British car sales were 18% lower in December than a year earlier.  Swiss unemployment edged up to 3.8% in December from 3.6% in November.

Canada’s jobless rate held at 7.6% in December after a 0.3 percentage point decline in November.  22,000 new jobs were created last month, akin to a 167K advance in the larger U.S. workforce.  Full-time positions in Canada grew 38K on month.  Overall employment was 2.2% greater than in December 2009 after having declined 1.1% over the previous recession-filled twelve months.

Brazilian consumer prices rose 5.9% on year in December.

U.S. jobs data will be released at 13:30 GMT.  Other scheduled U.S. releases are consumer credit and the federal budget.  Fed Chairman Bernanke will be testifying in the senate, and fellow Fed officials Yellen and and Evans have speaking engagements.  Snow is expected in the U.S. Northeast on this first Friday of 2011.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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