The dollar weakened and US stock futures slipped as traders braced for US jobs data that could impact the Federal Reserve’s decision on interest rates this month. Bloomberg’s dollar index fell for a third consecutive day, with speculation that a disappointing payrolls report could prompt a 50 basis-point rate cut. Asian currencies, particularly the yen and Philippine peso, strengthened, while Asian equities saw mixed performance due to a typhoon shutting down Hong Kong’s stock trading.
Chris Weston, head of research at Pepperstone Group, noted the lack of significant event risks in Asia, leading traders to focus on positioning ahead of the US payrolls release. Treasury yields in Asia dipped, putting pressure on the greenback. Market sentiment is bearish towards the dollar, with traders cautious about short-term bets given the uncertainty surrounding the upcoming data.
Interest-rate swap contracts suggest a 35% chance of a 50 basis-point rate cut by the Fed in their upcoming meeting. However, a quarter-point cut remains the more popular expectation among traders and economists. Currency analysts anticipate that the yen could test its August high against the dollar if the payrolls report supports a larger rate cut.
The potential impact of the typhoon on Hong Kong’s financial markets was a key concern, with trading suspended due to the storm. Elsewhere in Asia, Chinese brokerage stocks rose as state-backed firms announced merger plans. Additionally, traders are awaiting comments from Fed speakers John Williams and Christopher Waller following the release of the payrolls data.
Oil prices faced downward pressure amid concerns about weak demand and oversupply, while gold prices remained steady. Iron ore prices continued to decline, reflecting ongoing challenges in China’s steel market.
Key events to watch for include Eurozone GDP data and comments from Fed officials later in the week. Stock futures and major currency pairs showed mixed movements in early trading, reflecting market uncertainty ahead of the US jobs report. This article was created with the assistance of Bloomberg Automation.