NFP “Mood Swings”! Market Outlook

Noam Stiekema

We saw “mood swings” in the first hour of the release of NFP for June. 287K jobs were added, the highest in 6 months. However, May’s figure was revised downwards to a mere 11K, the lowest since Oct 2011!


By Wayne Ko, Head of Research & Education at Fullerton Markets

NFP posted the best figure in 6 months.  USD/JPY shot up 100 pips only to retrace back to pre-NFP level in less than an hour.

We saw “mood swings” in the first hour of the release of NFP for June.  287K jobs were added, the highest in 6 months.  However, May’s figure was revised downwards to a mere 11K, the lowest since Oct 2011!  Average earnings slowed to 0.1% and unemployment rate went up to 4.9%, both performed worse than expected.  The market celebrated initially as we saw USD/JPY shot up 100 pips in a minute, but the enthusiasm fizzled out quickly as we saw prices retraced back to pre-NFP level in less than an hour.

Although the figure is encouraging, we feel it is only good enough to increase the chances of rate hike in 2016 but not good enough for us to expect one this year.  Market is not pricing in anywhere near 50% chance of rate hike.  With the uncertainties from Brexit and US Presidential election, we foresee Fed to approach the next rate hike cautiously.

Brexit remains the top concern of the market.  Both UK Construction and Services PMI underperformed.  Manufacturing Production shrunk by 0.5%.  Sterling hit 30-year low.  Political uncertainties will continue to over-shadow economic data.  If economic data echoes the concern of BOE’s Governor, Mark Carney, it will only give market more reasons to sell the pound.  Are we seeing the bottom of the Sterling?  Judging from current situation, our take is no.

Both Aussie and Kiwi benefit from the demand for yield.  Market sort of shrugged off the political instability in Australia, S&P decision to downgrade Australia’s debt rating and chooses to focus on the fact that Aussie is still one of the higher yielding major currencies.  New Zealand has relatively lesser risk compared to their neighbour.  A heated property market has greatly reduced the chances of rate cut by RBNZ.

There are two central bank interest rate releases this week.  Bank of Canada is expected to maintain their interest rate and optimism as usual.  Oil prices may have dropped but it is still holding on much of the gain since start of this year.  The most interesting would be Bank of England.  This will be their first official rate announcement after the referendum.  Market is bracing for a rate cut, expecting all nine members of MPC to vote for a rate cut unanimously.  Even though market have priced in a rate cut to a certain degree, an actual rate cut could well possibly push the Sterling to another historical low.

Our Picks

GBP/USD – Bearish.  The support around 1.2870 may be holding for now.  BOE is expected to cut interest rate this week, an actual rate cut is likely to break the support.


AUD/NZD – Slightly bearish.  As mentioned in the earlier paragraph, Kiwi has a slight edge over Aussie at this point in time.  We do expect the downward momentum to continue.

AUDNZD Fullerton Markets

Dow Jones (U30/USD) – Slightly bullish.  As a follow-up from last week’s research, we continue to hold our view.  Market has broke the 18,000 level.  Our suggestion is to buy at the dip.

DowJones Fullerton Markets

Top News This Week (GMT+8 time zone)

Canada: Overnight Rate.  Wednesday 13th July, 10pm. We expect figures to remain unchanged at 0.5% (previous figure was 0.5%).

Australia: Employment Change.  Thursday 14th July, 9.30am. We expect figures to come in at 8.5K (previous figure was 17.9K).

UK: Official Bank Rate.  Thursday 14th July, 7pm. We expect figures to come in at 0.25% (previous figure was 0.5%).

Read this next

Digital Assets

Himalaya Exchange customers seek release of frozen funds from DOJ

FormerFeds, a corporate defense and litigation service provider, has filed a lawsuit against the U.S. Department of Justice (DOJ) on behalf of over three and a half thousand Himalaya Exchange customers.

Digital Assets

Nubank, Circle, and Talos join forces for crypto adoption in Brazil

Nubank, the Brazilian neobank backed by Warren Buffett’s Berkshire Hathaway and Softbank Group Corp, announced new partnerships with cryptocurrency firms Circle and Talos.

Metaverse Gaming NFT

Flare onboards Ankr, Figment, Restake, and NorthStake as validators

Flare, an EVM smart contract platform known for its focus on blockchain data utility, has announced a major step in its development. The platform has onboarded leading infrastructure providers, including Ankr, Figment, Restake, and NorthStake.

Digital Assets

Sui Joins DeFi Leaders, Topping $100M in Bridged USDC

Sui, the groundbreaking Layer 1 blockchain created by the technology experts who led Meta’s Diem blockchain initiative and created the Move smart contract language, continues its explosive ascent in decentralized finance (DeFi). This week, it surpassed $100 million in bridged USDC. 

Digital Assets

Poloniex hit by UK regulator, listed as ‘unauthorised’ exchange

The UK’s Financial Conduct Authority (FCA) has added the cryptocurrency exchange Poloniex to its warning list of non-authorized companies. Poloniex, which is based in Seychelles, has experienced four hacks in the last two months and is affiliated with entrepreneur Justin Sun.

Industry News

Exclusive Markets is Proudly ISO/IEC 27001:2013 Certified by MSECB for Unparalleled Commitment to Information Security

Exclusive Markets, a leading name in the FINTECH sector, proudly announces the attainment of ISO/IEC 27001:2013 Certification by the MSECB. This esteemed certification highlights Exclusive Markets’ persistent commitment to fortifying information security within its cutting-edge trading technology. 

Digital Assets

SEC is discussing ‘technical details’ of Bitcoin EFTs ahead of approval

Discussions between the U.S. Securities and Exchange Commission (SEC) and asset managers seeking to list Bitcoin exchange-traded funds (ETFs) have reportedly advanced to key technical details.

Digital Assets

Versatus Labs Reaches $50 Million Valuation Following $2.3 Million Seed Funding Round

Versatus Labs, a peer-to-peer web services protocol aiming to help Web2 developers transition to Web3, has completed a $2.3 million funding round at a $50 million valuation led by key investors in the Web3 space including NGC Ventures and Republic Crypto. The latest funding round aims to help the company develop the ‘world’s first stateless roll-up’, Versatus LASR. This follows Versatus Labs’ recent pivot from Layer 1 solutions to Ethereum scaling solutions. 

Digital Assets

Binance ex-chief’s sentencing looms as court accepts his guilty plea

A U.S. district judge has accepted a guilty plea from former Binance CEO Changpeng Zhao (CZ) on charges related to anti-money laundering violations. The plea was accepted by Judge Richard Jones in the U.S. District Court for the Western District of Washington in Seattle.