All eyes will be on the US employment data tonight. The market consensus is expecting a reasonable new jobs gain of 175k after a shocking 38k May data and past three months average of 116k. While unemployment rate has fallen, this is driven by exodus from the labour force, indicating people looking for work are giving up. The diverge between consensus and the latest trend will ensure traders and investors are looking at it closely for confirmation that the weak print was short lived. The market is also desperate for positive news after Brexit, European banks bad loans and UK property funds freezing redemption.
Risk sentiment are in tug of war between Brexit ramification and global uncertainty versus the belief that central banks are ready to step in to provide further stimulus. Safe haven flows to sovereign bonds continue as yield drop to historic levels. Commodities including oil, soybeans, gas, sugar have corrected from their strong run past months. The flight of safety has not relatively affected the Australian dollar and equities negatively as it usually would, supported by the search for higher yielding assets. A strong NFP tonight could change that, although a very strong number of 250k+ is probably needed to reprice US Fed rate hike expectation.
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