Joshua Mahony MSTA
Scope Markets
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European markets struggle for direction.
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TSMC earnings highlight strong demand for AI stocks.
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US jobs report set to dominate.
A mixed start in Europe has seen indices largely treading water on a day that will be dominated by a US jobs report that poses a fresh risk in the face of growing inflationary concerns sparked by Tuesday’s ISM services PMI report. In Europe, the surge in borrowing costs has hurt sentiment as traders weigh up the economic and budgetary implications of continued upside in yields. For the FTSE 100, the weakness of the pound has helped lift valuations as the FTSE 250 bears the brunt of the selling pressure once again today. However, much of the upside in borrowing costs does come down to the prospect of an inflationary push in the US under Trump, highlighting the importance of US economic data such as today’s NFP for European markets and borrowing costs.
US earnings season kicks off with the big banks next week, but the data from global chip manufacturing giant TSMC brought a welcome boost for sentiment around the AI trade overnight. With the world’s largest chip manufacturer topping estimates for fourth-quarter revenues which came in at 868.5 billion New Taiwan dollars (up 38.8% year-on-year), all eyes will be on the US tech giants at the open given the positive implications for the likes of Apple, AMD, Nvidia, Qualcomm, and Broadcom.
Looking ahead, today will be dominated by the latest jobs report, as traders hope to see things cool down from a bumper 227k figure that raised concerns over a potential overheating of the economy even before Trump takes office. Markets will be watching closely for any signs of inflationary pressures building with the wage growth figure followed closely. The dollar is the clear-cut play when it comes to the data right now, with the dollar index currently on course of a sixth consecutive week of gains that have taken it into a two-year high. With both wage growth and payrolls expected to pull back, such a move could help lift equities as we head into the weekend.
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EUR/USD trades deep in red below 1.0300 after strong US jobs report
EUR/USD stays under bearish pressure and trades below 1.0300 in the American session on Friday. The US Dollar benefits from the upbeat jobs report, which showed an increase of 256,000 in Nonfarm Payrolls, and forces the pair to stay on the back foot heading into the weekend.
GBP/USD drops toward 1.2200 on broad USD demand
GBP/USD extends its weekly slide and trades at its weakest level since November 2023 below 1.2250. The data from the US showed that Nonfarm Payrolls rose by 256,000 in December, fuelling a US Dollar rally and weighing on the pair.
Gold ignores upbeat US data, trades above $2,680
Following a drop toward $2,660 with the immediate reaction to strong US employment data for December, Gold regained its traction and climbed above $2,680. The risk-averse market atmosphere seems to be supporting XAU/USD despite renewed USD strength.
Sui bulls eyes for a new all-time high of $6.35
Sui price recovers most of its weekly losses and trades around $5.06 at the time of writing on Friday. On-chain metrics hint at a rally ahead as SUI’s long-to-short ratio reaches the highest level in over a month, and open interest is also rising.
Think ahead: Mixed inflation data
Core CPI data from the US next week could ease concerns about prolonged elevated inflation while in Central and Eastern Europe, inflation readings look set to remain high.
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