US OUTLOOK/OPINION: Wells Fargo See U/E Insulated But Not Immune From Disruption
Oct-31 20:47
- Wells Fargo see nonfarm payrolls growth of 75k in October but it “will be difficult to get a clean read from the October jobs report on whether employment conditions are firming up as much as the September report implied”.
- “The ongoing strike at Boeing has sidelined 33K union workers and led to furloughs for some non-union workers. In addition, payrolls are likely to be depressed from the devastation caused by hurricanes Helene and Milton, the latter of which made landfall during the survey week.”
- “The unemployment rate should be more insulated—although not entirely immune—from these events. Striking workers are still considered employed in the household survey, although furloughed workers are not. Similarly, workers absent from work due to weather are still counted as employed, although workers at businesses destroyed would not. We look for the unemployment rate to be unchanged in October at 4.1%.”
- “While the October payroll print will likely understate the current position of the jobs market, we continue to see strains under the surface that point to the jobs market softening further in the near term. Hiring remains narrowly concentrated among industries, average weekly hours point to businesses using existing workers less intensely, and consumers see a dwindling number of job opportunities. The cooler backdrop should keep a lid on average hourly earnings growth, which we expect to rise 0.3% in October.”
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USDCAD TECHS: Gains Considered Corrective
Oct-01 20:00
- RES 4: 1.3693 High Aug 19
- RES 3: 1.3647 High Sep 19 and key resistance
- RES 2: 1.3593 50-day EMA
- RES 1: 1.3541 20-day EMA
- PRICE: 1.3502 @ 16:20 BST Oct 1
- SUP 1: 1.3420 Low Sep 25 and the bear trigger
- SUP 2: 1.3413 Low Feb 9
- SUP 3: 1.3358 76.4% retracement of the Dec 27 ‘23 - Aug 5 bull run
- SUP 4: 1.3288 Low Jan 5
USDCAD remains in a clear downtrend and the strong Sep 24 sell-off reinforces this condition. The pair has traded through support at 1.3441, the Aug 28 low. This breach confirms a resumption of the downtrend that started Aug 5. The move down paves the way for an extension towards 1.3358, a Fibonacci retracement. Initial firm resistance is seen at 1.3541, the 20-day EMA. Short-term gains are considered corrective.
US TSYS: Middle East Geopol Risk Overshadows US Data
Oct-01 19:40
- Treasuries look to finish higher, near Friday's closing levels amid waves of risk-on/safe haven support in the first half. Treasuries initially rallied with EGBs after Israel kicked off a ground assault in southern Lebanon. Levels extended the rally back to September 20 levels as wires reported Iran had launched dozens of ballistic missiles at Israel.
- Dec'24 10Y futures climbed to 115-00.5 high, near initial technical resistance of 115-02.5 (Sep 19 high). The rally did not translate to steeper curves, however, 2s10s flattening another -1.514 to 12.470 after Monday's move off near 20.0 high.
- Treasury futures receded from session highs as IDF officials reported "no additional threats" after Iran missile attack largely intercepted in transit to Israel and Israelis allowed to exit shelters. Dec'24 10Y futures currently trade 114-23 (+14), 10Y yield currently -.0437 at 3.7372%.
- Projected rate cut pricing into year end gaining some momentum vs. this morning's levels (*): Nov'24 cumulative -34.9bp (-35.4bp), Dec'24 -70.8bp (-68.9bp), Jan'25 -102.3bp (-102.1bp).
- Geopol risk overshadowed the day's ISM Mfg miss and higher than expected job openings in JOLTS data. Focus turns to Wednesday's ADP private employ data ahead of Friday's headline September jobs data.
AUDUSD TECHS: Bull Cycle Extends
Oct-01 19:30
- RES 4: 0.7029 High Feb 14 ‘23
- RES 3: 0.6984 0.764 proj of the Aug 5 - 29 - Sep 11 price swing
- RES 2: 0.6977 2.0% 10-dma envelope
- RES 1: 0.6942 High Sep 30
- PRICE: 0.6881 @ 16:17 BST Oct 1
- SUP 1: 0.6868/6800 Low Sep 27/ 20-day EMA
- SUP 2: 0.6735 50-day EMA
- SUP 3: 0.6622 Low Sep 11 and key support
- SUP 4: 0.6608 Low Aug 16
An uptrend in AUDUSD remains intact and the pair traded to a fresh cycle high Monday, reinforcing the current trend set-up. Key resistance at 0.6824, the Aug 29 high, has recently been cleared. The break confirmed a resumption of the bull cycle that started Aug 5. Sights are on 0.6984 next, a Fibonacci projection. On the downside, initial firm support lies at 0.6800, the 20-day EMA. A pullback would be considered corrective.
