On Super Friday (July 7th) night, the global financial market will usher in three “nuclear bombsâ€: 1. US non-farm employment report; 2. Fed monetary policy report; 3. G20 summit kicked off in Hamburg, Germany! Non-agricultural night, the super market is coming... Asian city in early trading, gold, silver instantly "flash collapse", European market early, crude oil suddenly dive, the financial market tonight is doomed to be extraordinary.
Market review:
In early Asian trading on Friday, gold and silver were flashing! COMEX Silver fell more than 10% to 14.34 in 7:02 in one minute; but then rebounded to around 16 in 3 minutes; COMEX August gold 07:06 sold 3,797 hands in one minute (nearly 460 million US dollars...
In early European trading on Friday, crude oil fell sharply, and oil and oil fell more than 2%. NYMEX's most active August WTI crude oil futures contract reached 13,359 lots in the three-minute time from 16:37-16:39 Beijing time, with a turnover of nearly 600 million US dollars...
Analysts pointed out that before the non-agricultural release, the gold and silver oil riots seemed to be warming up for the super market in the evening. The foreign exchange market was “quietly quietâ€, waiting for the storm to come, and the super market was on the verge!
1. Super Friday Night: US Non-farm Employment Report
At 20:30 Beijing time, the US Department of Labor will announce the change in non-agricultural employment in June, the unemployment rate! Reuters survey shows that analysts estimate that the United States added 179,000 jobs in June, up from 138,000 in May.
The most important forward-looking indicators released overnight: The US ADP employment population, which is known as the US non-farmless farmer, is disappointing, with an increase of only 158,000, which is a significant decline from last month's data and less than market expectations.
In May of this year, non-agricultural employment data was expected to rebound strongly, but the actual employment data was very bad, only 133,000 new jobs were added, compared with 211,000 in April. What is the probability of a strong non-agricultural employment report in June?
According to statistics, from the end of 2015 to the beginning of 2016, the average monthly employment is 240,000, and the employment growth in the past three months is only 121,000. However, in the case of the economy close to full employment, at least from the perspective of the Fed, this is not worrying.
The market expects the United States to add 17.9 jobs in June, while the unemployment rate is expected to remain unchanged at 4.3%. There is almost no change in wages. It is expected that the monthly rate will increase from 0.2% in the previous month to 0.3%, and the annual rate will rise from 2.5% to 2.6%.
In any case, if the overall data is in line with expectations, the market focus will shift to wage increases, but the salary needs to increase unexpectedly to support the dollar rebound. If the overall data is disappointing, there is no chance for the dollar to rebound.
Goldman Sachs) is expected to increase the non-agricultural employment population by 180,000. The average hourly wage data is expected to perform well, but the unemployment rate is at an increased risk. When talking about salary data, Goldman Sachs believes that the latest data will reflect a slightly favorable “calendar effectâ€.
Sam Bullard, senior economist at Wells Fargo Securities, said the June employment report may provide enough evidence for Fed officials that they are still prepared to continue monetary policy normalization plans in the second half of this year.
The Fed carried out its second rate hike during the year in June this year. However, as the inflation rate falls further below the 2% target in May, economists expect the Fed to raise interest rates again in December this year.
The minutes of the Federal Reserve’s June meeting released on Wednesday showed that some policymakers hope to announce before the end of August that they will begin to reduce the Fed’s large portfolio of public debt and mortgage-backed bonds (MBS), but other policymakers hope to wait until later this year.
US Treasury yields have risen, boosting the dollar. Despite the weak employment and service data on Thursday, the US bond yields have not been affected, as the market is worried that the Fed will begin to reduce its bond positions this year.
Although the latest non-agricultural reports – such as February, March and May – are better than market expectations, according to Bloomberg, the Bloomberg Dollar Spot is after the last 10 non-farm reports. Index) has suffered a setback in nine times.
The US Department of Labor is scheduled to announce the June non-farm payrolls report at 20:30 on Friday, Beijing time. According to foreign media surveys, the number of non-agricultural employment in the United States increased by 177,000 in June, an increase of 138,000 last month. The US unemployment rate in June is expected to remain flat at 4.3%.
The survey also showed that the average monthly hourly rate in the United States is expected to increase by 0.3% in June, up 0.2% in the previous month. The average hourly rate in June is expected to increase by 2.6%, up from 2.5% last month.
Goldman Sachs strategist Michael CA Hill said the dollar did not react unexpectedly to positive economic data, but continued to weaken significantly due to negative news. As long as this continues, the risk will be biased downwards after each data release.
Bank of America Merrill Lynch (BofAML) analysts said on Friday that they continue to believe that the USD/JPY is in the mid-term bull market. If the dollar/yen rises above 120.
UOB said that the US/Japan is still in a bull market, although the possibility of the US dollar further strengthening to 114.35 has been reduced, but only below 112.40 will be announced, starting on June 20 (at that time the exchange rate was 111.65) The bull market is over.
2. Super Friday Night: Federal Reserve Monetary Policy Report
According to the Fed’s statement on June 29, a semi-annual monetary policy report will be released on July 7 (friday), and on July 12, Fed Chair Yellen will testify in Congress.
Federal Reserve Chairman Yellen will testify in the House of Representatives at 22 o'clock on July 12th, Beijing time. Yellen’s speech will be announced at 8:30 on the same day.
Previously, reports related to the US economy or central bank policies were generally published along with Federal Reserve Chairman Yellen’s congressional testimony, and the reason for the early release was probably to leave time to review the report before Congress and Yellen testified. .
In June, the Federal Reserve raised interest rates by 25 basis points as scheduled, and made clear at the meeting that it would start to shrink the table to promote the normalization of monetary policy. According to the previous Fed monetary policy report, investors need to focus on:
I. Current economic situation and prospects
Yellen has previously pointed out that the growth rate of productivity in the United States is slowing down. For most Americans, real income has not increased, and household inflation has also declined. Fed officials believe that a low unemployment rate will help achieve inflation targets.
Second, monetary policy
The Fed has raised interest rates twice in 2017, and has issued a specific plan for contract reduction at the June meeting. In general, the effect of shrinking the rate hike is greater than the rate hike, because it reflects the Fed’s willingness to tighten.
The policy of low interest rates has been implemented for many years, bringing a series of negative effects, such as asset bubbles and the gap between the rich and the poor. Adjusting monetary policy has become a trend that the Fed must change.
Third, the financial market is stable
In Yellen’s previous speech, it can be seen that the economic outlook is quite optimistic, and it is said that there will be no financial crisis in the United States in the lifetime.
Yellen also pointed out the results of the bank stress test, saying that the large banks in the United States have strong capital and can better resist the impact. The US financial system is stabilizing with the help of the Fed.
When the Fed’s monetary policy report met the non-agricultural employment data for June, the market volatility will further intensify!
3. Super Friday Night: G20 Summit
The Group of 20 (G20) summit kicked off today in the German port city of Hamburg. Leaders of major global economies are ready to engage in difficult negotiations with US President Trump on issues such as climate change and trade.
On Friday afternoon local time, Trump will meet with Russian President Vladimir Putin for the first time. The meeting is expected to attract close attention. The US intelligence agency said that Russia was suspected of interfering in the US election and helping Trump win the election.
In addition, during the summit, Trump will also meet with Chinese President Xi Jinping. At present, the United States is exerting pressure on Beijing on the North Korean issue and threatening to adopt punitive trade measures against China. North Korea successfully tested the intercontinental ballistic missile.
On the issue of trade, sources said that Washington is withdrawing its claim to condemn protectionism. Trump had endorsed these claims at the G7 meeting in Sicily in late May.
One of the shadows of the trade discussion is that Washington threatened to use the Cold War laws to restrict steel imports on the grounds of national security, a move that would hit Chinese and European partners. German Foreign Minister Gabriel hinted on Thursday that these measures may trigger a trade war between Europe and the United States.
On the occasion of the arrival of the leaders on Thursday, the riot police fired high-pressure water guns on thousands of protesters dressed in black and throwing bottles; the demonstrators called the protest "welcome to hell."
About 20,000 police officers from 16 German states are deployed on the streets of Hamburg. They will respond to as many as 100,000 protesters, including some 8,000 protesters who the police believe may be ready to use violence.
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