US Stocks Mixed Ahead of Employment Data – Dow down 0.9%
US equity markets delivered a mixed performance overnight as investors positioned cautiously ahead of key US employment data due later in the week. The Dow Jones slipped 0.94% to close at 48,996, retreating from record highs, while the S&P 500 eased 0.34% to 6,920. In contrast, technology stocks provided modest support, with the Nasdaq edging 0.16% higher to finish at 23,584. The US dollar firmed slightly against the major currencies, with the DXY rising 0.15% to 98.73. US Treasury yields were mixed across the curve, as the 2-year yield ticked 0.6 basis points higher to 3.470%, while the 10-year yield fell 2.5 basis points to 4.148%. Commodity markets remained under pressure, with oil prices extending recent declines amid ongoing supply concerns. Brent crude fell 0.58% to $60.35 a barrel, while WTI dropped a sharper 1.5% to $56.36. Gold also eased as profit-taking emerged near record levels, slipping 0.85% to $4,456.47 an ounce after its recent strong rally.
Non-Farms in Focus for FX Traders in Coming Sessions
There is no doubt that, for FX markets, the upcoming Non-Farms payrolls data release on Friday will be the premier event of the week and possibly even the month. The Fed have made no secret of their increased focus on the US job market over the past few months, and the overall market is looking for more weakness to lock in interest rates in the coming months. Currently, the market is pricing in just an 11% chance of another 25-basis-point cut at the January meeting; however, a sharp drop in the data on Friday could see these odds increase dramatically and see the dollar drop into fresh ranges on the majors. Conversely, anything much higher than the expected 60k print would push rate-cut expectations further into 2026 and see the greenback rally strongly. Whatever happens, FX traders are expecting moves in the major currencies around the data release.
Calm Calendar Day Ahead of Tomorrow’s Non-Farms
It is a relatively quiet day on the macroeconomic calendar today ahead of tomorrow’s key US employment numbers. The Asian session is set to open slightly on the back foot today after a mixed day on Wall Street, and with little on the event calendar, traders are expecting relatively quiet trading conditions unless anything pops up on the geopolitical front. European session focus will fall on Swiss inflation data, with CPI figures due out early in the piece. Market expectation is for a 0% move in the month-on-month data, and anything off this should see moves in the franc, especially given that the SNB is already on zero interest rates. Attention in the US session turns to further labour market signals, with weekly unemployment claims released shortly after the open. The market is expecting a blip up to 213k after a dip last month, but most traders are expecting the impact to be limited ahead of tomorrow’s key NFP update.
