20130909

Good morning,

Markets were mixed to higher on Friday with a strong session in Europe with Euro Stoxx 50 up around 1% with Italy and Spain leading the pack. In the US, the momentum was not able to be sustained and indices were more or less unchanged following the softer-than-expected August US job report, where the Nonfarm Payrolls came out at 169K vs. 180K expected. The Unemployment rate fell to 7.3% vs. 7.4% expected, but the improvement can be attributed to another drop in the participation rate to 63.2%. Also, the revision to the prior figure subtracted 74K, so the development in the US job market is not as good as the unemployment rate shows. With that in mind, the market is still convinced that the Fed will carry on with the so-called 'Septaper', which should support the US Dollar.

FX Markets reversed the weekly trends on Friday as the US Dollar was sent on the offer following the weaker Job report and a strong development in the ISM Service index, which came out better than expected. EUR/USD coming back above the 200-day SMA after finding bids at the 50% Fibo in the recent wave on daily, just above the 1.31-figure and Cable enjoying a close above the 50-week SMA just below the 1.56-figure, which has been capping price action throughout 2013. USD/JPY did not manage to sustain above the 100-figure, despite closing above on Thursday. So far, we are still above the daily Cloud, but we could see additional correctional moves today, which could change the outlook to become more shady. See more in our technical analyses.

Today, the market action is expected to be a tad quiet as the market is lacking news. From Switzerland, the July Retail Sales came out quite softer than prior at 0.8% vs. 2.3%, but no real reaction has been seen in the Swissie. We are still quite bearish on the Swiss Franc overall and see it depreciate quite a lot against the EUR and US Dollar. At 12:30 GMT, the Canadian Building Permits will be interesting following the 10.3% decline in July. Consensus is at a gain of 1.0%. USD/CAD took out the 50-day SMA and is this morning below the 100-day SMA with 38.2% Fibo in the May-July acting as support for now, but bearish pressure is present.

Looking ahead, the markets will focus on the situation in Syria and the rings in the water surrounding it on a geo-political level, whereas the macro data for this week will be dominated by UK employment figures (Wednesday) and from the US, the Retail Sales (Friday) will be the most interesting from across the Atlantic.

Have a nice day.