Asian Market Watch: The Implications of US Non-Farm Payrolls

Asian Market Watch: Unpacking US Non-Farm Payrolls. Insights on Asian markets, currencies, and commodities as BoJ Governor’s analysis awaits.

As the Asia market begins its day on November 6, 2023, market participants reflect on the recent developments in the US session. The non-farm payrolls report revealed a significant miss in job growth, with the unemployment rate edging higher. This data, alongside other key events, is expected to shape trading dynamics in the Asian session. Let’s dive into the analysis of what transpired in the US and how it could impact Asian markets today.

Asian Market Watch – The Implications of US Non-Farm Payrolls

What happened in the US session?

In the US session, the non-farm payrolls (NFPs) report showed weaker-than-expected job growth of 150k, falling short of the estimated 178k jobs. The unemployment rate also increased from 3.8% to 3.9% in October. This disappointing employment data, influenced by strikes in the manufacturing sector, acted as a bearish catalyst for the dollar index (DXY), causing it to drop from 105.85 to 104.94 by the end of the session.

What does it mean for the Asia Session?

During the Asia session, all eyes were on Bank of Japan (BoJ) Governor Kazuo Ueda’s press conference in Nagoya. Market participants awaited clues regarding the BoJ’s approach to its Yield Curve Control (YCC) policy. The BoJ had identified a target level of 1% on the 10-year Japanese bond yield, allowing flexibility in future policy actions and increasing the likelihood of currency intervention by the Ministry of Finance (MOF). The event was to have a significant impact on the Japanese yen.

Currency and Commodity Overview

Dollar Index (DXY)

Following the disappointing US employment report, the DXY remained under pressure as Asian markets digested the latest data from the US labor market.

Gold (XAU)

Weaker demand for the greenback was likely to boost gold prices as Asian markets reacted to the subdued US employment data.

Australian Dollar (AUD)

The Australian dollar showed strength, surpassing a critical resistance level of 0.6500, indicating a strong bullish trend for the currency.

Kiwi Dollar (NZD)

The New Zealand dollar had a strong finish last Friday, reaching the threshold of 0.6000. This level could pose a significant resistance for the currency in the current market scenario.

Japanese Yen (JPY)

Market participants expected BoJ Governor Kazuo Ueda’s press conference to create high-impact market volatility for the Japanese yen, fueled by the possibility of currency intervention and the BoJ’s flexible policy approach.

Euro (EUR)

Analysts anticipated that the Eurozone’s Services PMI data would reveal a third consecutive month of contraction, which could exert downward pressure on the Euro.

Swiss Franc (CHF)

Investors anticipated a decrease in demand for the greenback, which put pressure on USD/CHF as it fell below the 0.9000 threshold.

Pound (GBP)

The UK’s Construction PMI indicated a continued contraction in the construction sector, likely to weigh on the Pound in the market.

Canadian Dollar (CAD)

Canada’s Ivey PMI showed intense business activity, potentially lifting the Canadian dollar and causing USD/CAD to decline.

Oil

Crude oil prices rose as concerns about further rate hikes by the Federal Reserve diminished. Tighter production supplies supported prices, with WTI oil attempting to climb above the $ 81 mark.

Overall Bias for the Next 24 Hours

AUD: Strong Bullish

NZD: Weak Bullish

JPY: Weak Bullish

EUR: Medium Bullish

CHF: Medium Bearish

GBP: Medium Bullish

CAD: Strong Bearish

Oil: Weak Bullish

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