There is a slight edge of risk aversion creeping into markets this morning. Perhaps this has something to do with President Trump going ahead with signing an executive order to ban Chinese apps TikTok and WeChat. Furthermore, the negotiations between US Democrats and Republicans over the composition of a US fiscal support package rumble on without any agreement. All the while, the millions of US unemployed workers due to the pandemic economic restrictions now suffer from a cliff-edge of expired support. The market impact is seeing a mild improvement for the US dollar today, whilst equities are stalling their rally and even the bull run on gold is consolidating. This could also be as much to do with the anticipation of the July US employment report, with a risk that Nonfarm Payrolls could disappoint. After record month on month job gains from June, trends for July look less encouraging as swathes of the US were required to reinstate restrictions as COVID-19 infection rates soared. The China trade surplus grew enormously overnight as exports increased by +7.2 way ahead of forecast and imports fell by -1.4% which was lower than forecast. This has done little to improve sentiment in the Asian session which hands over mild risk aversion to the Europeans.
Wall Street closed higher yet again last night with the S&P 500 +0.6% at 3349 now less than 2% off its all time highs. US futures are though giving back some of these gains today with the E-mini S&Ps -0.3%. Asian markets reflect this slip back with the Nikkei -0.4% and Shanghai Composite -0.6%. European indices are looking a touch cautious today, with DAX futures +0.1% and FTSE futures again lagging -0.1%. In forex, we see a mild rebound on USD forming, with most major currencies around -0.3% weaker on the dollar in early moves, with just the safe haven JPY holding up. In commodities, slightly weight by a dollar bounce we see silver has unwound by -2% in early moves, whilst gold is around -$4 or -0.2% weaker as the bull runs consolidate. Oil is a shade lighter just under half a percent lower.
Traders will have key focus on the payrolls report which dominates the economic calendar today. The US Employment Situation is at 1330BST and is expected to show the headline Nonfarm Payrolls