Good morning. The equity markets finished Friday on a weak note with Non Farm Payroll figures disappointing traders and economists. Recording a 103,000 rise for the period, initial estimates were in the range of 130,000 -150,000. The unemployment rate however painted a positive picture with a contraction to 9.4%. Contrasting figures led to an initial spike in the markets, before profit taking and uncertainty pushed the indices lower. Earnings season begins this week, with economists forecasting a significant rise in net profit and revenues due to a shift in growth. Thomson Reuters expect a 32% rise in average earnings growth for corporates, with financials and mining expected to lead the way. Analysts however are wary on the short term revenue growth of the health and education sectors due recent corporate downgrades and regulatory pressure. On the economic front, PPI and Trade Balance figures will be released on Thursday with CPI and Retail Sales on Friday. Producer Price Index estimates range from 1.0 – 1.2%, with a slight increase in the trade deficit for the period. Bernanke and the Fed, will be keenly watching the growth patterns in CPI and core inflation with expectations of a sharp rise for the December period.
On the equity market front, the Dow Jones fell 23 points with the Financials sector weighing on the index. A ruling from a state judge on foreclosures compounded the losses for several Banks and Financial Services providers.
On the currency front, Non Farm Payroll Data influenced the USDJPY on Friday with the currency pair falling to 83.01. Economists expected a significant rise in payrolls for the period after buoyant mid week data pointed to a recovery. Traders moved away from risk after the announcement pushing the yen higher and limiting their exposure to the greenback. The BOJ continued to watch currency movements with the corporate export earnings and economic growth in mind. Lacking clear direction, the Canadian dollar fell into a range during the morning session. A temporary rise in commodities in the afternoon helped the CAD rise slightly against the greenback. Traders however struggled to decide on the pair’s direction, with employment data indicating a possible recovery in the US. The USDCAD traded at 0.9921.