The news shaping the markets today

With the Russia-Ukraine war entering its fifth month, President Vladimir Putin urged Kyiv to accept his terms or prepare for the worst. However, WTI crude oil prices traded slightly lower this morning, after recording gains in the previous session.

Argentina’s industrial production surged 11.9% year-over-year in May, the fastest growth rate since July 2021. However, the ARS/USD forex pair remained under pressure mainly due to the strength of the US dollar.

Pakistan’s central bank raised its key policy rate by 125bps to 15%, in a bid to combat surging inflation levels, following a sharp depreciation of the rupee. Despite this, the PKR/USD pair continued to slide in forex trading this morning.

US trade deficit narrowed by $1.1 billion to a five-month low of $85.5 billion in May, which sent the Nasdaq 100 index sharply higher by more than 250 points on Thursday.

Peru’s central bank announced plans to increase the policy rate for the twelfth consecutive month by 50 basis points to 6%. However, the PEN/USD forex pair traded lower after this news.

What’s happening: The US Labor Department is scheduled to release its jobs report for June on Friday, at 0830 ET (1230 GMT).

What happened: US employers are expected to have added the fewest jobs in around a year in June.

However, one of the major parameters in the all-important non-farm payrolls (NFP) report is projected to show another month of solid growth.

Why it matters: The US labour market is exhibiting solid growth, despite the volatile environment as the Federal Reserve gears up to combat decades-high inflation by aggressively raising interest rates.

Although big companies, including Tesla and Netflix, have announced layoffs recently, there is no major proof of this trend being widespread across sectors.

The US economy has been adding jobs and inching closer to the pre-pandemic levels. However, economists on average, project an easing in job growth in the coming months. While some weakness is expected in residential construction, hiring in industries like entertainment and travel could exhibit a sharp rise due to higher demand with the easing of pandemic-related concerns.

The recent jobs report follows a mixed bag of employment data, with the US employers announcing 32,517 layoffs during June, representing a 58.8% surge from the year-ago month. Initial jobless claims rose by 4,000 from the previous week to 235,000 in the week ending July 2, the highest level since mid-January. The survey released on Wednesday showed around 11.3 million job openings in May.

Estimates for the June report:

• Analysts on average expect the US economy to add 270,000 jobs in June, which would be one of the smallest gains during the covid-19 recovery.
• The unemployment rate is expected to hold at 3.6%.
• Average hourly earnings for all employees on private nonfarm payrolls had risen by 0.3% to $31.95 in May and are projected to rise by 0.4% in June.

What to watch: The release of the NFP reports typically causes volatility in global stock and forex markets. Traders will also keep an eye on any announcements by Federal Reserve policymakers, as the state of the labour market will impact the central bank’s monetary tightening measures.

The markets today

The Canadian dollar will be in focus today ahead of the jobs report from the country

Context: The CAD/USD forex pair traded higher on Thursday, driven by a rebound in crude oil prices.

Details: Crude oil prices rose sharply, surging past the $102 mark, amid concerns around tight worldwide supplies. WTI crude oil futures jumped 4.3% to close at $102.73 per barrel on Thursday. The news sent the Canadian dollar higher on Thursday, as oil is one of Canada’s main export products.

The Canadian dollar was also supported by some weakness in the US dollar, which halted its recent bullish run, easing slightly from the two-decade high reached on Wednesday. The greenback eased with an improvement in the overall risk appetite in global markets.

The US Federal Reserve is widely expected to stick to its faster policy tightening, while the Bank of Canada could increase its overnight rate by 75 bps at its meeting next week and boost rates by another 50 at its September meeting.

Traders also responded to economic data from Canada, which showed a widening of trade surplus to C$5.3 billion in May, well above the consensus estimate of C$2.4 billion and up from the C$2.2 billion reported in the previous month. The country’s trade surplus was supported by higher prices of energy products, which sent exports to a record high of C$68.4 billion in May. Although the Ivey Purchasing Managers Index for Canada eased to 62.2 in June, from May’s reading of 72, it still showed solid growth.

The CAD/USD forex pair settled higher by around 0.5% at 1.2970 on Thursday.

What to watch: Traders await jobs data from Canada today. The unemployment rate, which declined to 5.1% in May, is expected to hold at the same level in June. The Canadian economy is expected to add 23,500 jobs in June, following 39,800 additions in the previous month.

Other Markets: European trading indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 1.14%, 1.97%, 1.60% and 1.88%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

France’s balance of trade, current account, exports and imports, Turkey’s current account, Italy’s industrial production, India’s foreign exchange reserves, Brazil’s inflation rate, car production and car registrations, Russia’s current account and consumer prices, US wholesale inventories, consumer credit and Baker Hughes crude oil rigs, G20 foreign ministers meeting as well as OECD global forum on productivity.

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