ForexGen | Wakeup Call: Negative Sentiment Ahead of US Nonfarm Payrolls

U.S. August nonfarm payrolls due out at 12:30 GMT will mark today's key market risk event.
Overnight News Bullets§ FR ILO Unemployment Rate (2Q), out at 7.6% vs. 7.5% exp. 7.5% prior.
§ SW Riksbank Interest Rate hiked to 4.75% from 4.50% as expected.
§ HBOS Plc house prices (Aug), out at -1.8% vs. -1.8% exp. -1.7% prior.
§ HBOS House Price 3Mths/Year (Aug), out at -10.9% vs. -10.7% exp. -8.8% prior.
§ GE Factory Orders MoM/YoY (Jul), out at -1.7%/-0.7% vs. 0.3%/-2.2% exp. -2.9%/-6.1% prior.
§ UK BOE kept rates at 5.00% as expected. •ECB kept rates at 4.25% as expected.
§ US ADP Employment Change (Aug), out at -33K vs. -30K exp. 9K prior.
§ US Nonfarm Productivity (2Q F), out at 4.3% vs. 3.5% exp. 2.2% prior.
§ US Unit Labor Costs (2Q F), out at -0.5% vs. 0.0% exp. 1.3% prior.
§ US Initial Jobless Claims (Aug 30), out at 444K vs. 420K exp. 425K prior.
§ US Continuing Claims (Aug 23), out at 3435K vs. 3423K exp. 3423K prior.
§ US ISM Non-Manf. Composite (Aug), out at 50.6 vs. 49.5 exp. 49.5 prior.
§ US EIA Natural Gas Storage Change (Aug 29), out at 90 vs. 90 exp. 102 prior.
§ US DOE Crude Oil Inventories (Aug 29), out at -1898K vs. 450K exp. -3502K prior.
§ US ICSC Chain Store Sales YoY (Aug), out at 1.7% vs. 2.6% prior.
Markets
§ FX: Further Euro-Zone recession worries has sent the Euro on a further decline, EURUSD made a low of 1.4215
§ Fixed Income: Economic slump, and equity sell-off has been a boon for Fixed Income headed for biggest weekly gain in 6 months.
§ Stocks: A weak session again across the board, US losses carried by the financial sector, the weak sentiment carried into Asia.
§ Commodities: Even with a severe unexpected draw in crude oil inventories oil failed to rally and is still resting under $110.

The Sunrise Headlines | ForexGen

§ US equities up to 3% lower, which might have been due to forced selling and con-cerns about the health of major market participants. Asian stocks had a weak opening and were unable to regain the early losses.
§ South Korea intervened on forex markets once again to support the tumbling won, which has been hammered by fears of capital flight from Asia's fourth-biggest economy.
§ Russia's central bank intervened to support the ruble as there had been capital outflows since the conflict with Georgia. Ruble shows very limited gains.
§ Sheila Bair, Federal Deposit Insurance Corp's chairman says that troubled loans keep rising and US banks will need to shore up their reserves to cover potential losses in the next quarters.
§ Lehman Brothers considers a plan to put some $32 billion of its commercial real estate and mortgage assets in a new spin-off.
§ Oil ($107.70) falls as inventories report shows declining demand.
§ Today, German Industrial production (July) and the US August payrolls on the cal-endar.

ForexGen | Sunrise Market Commentary

§ US Treasuries profit from plunging equities Treasuries continued their bull run as equity jitters stoke demand for super safe assets. Global economic outlook deterio-rates, but financial market stress looks a better reason to explain yesterday's price action. Equities are on the verge of re-testing the cycle lows. Will the US payrolls bring the markets to a climax?

§ Bund breaks above recent highs improving the technical pictureYesterday, the ECB as expected left rates unchanged and signalled no plans for an early rate change, as upside inflation risks still prevail. Bonds however rally higher on plunging equities with the Bund breaking above the recent highs thereby improving the technical picture.

§ Euro hammered. EUR/USD tests key long-term support levels A new flaring up of investor risk aversion showed the new hierarchy on the currency markets. The yen is still the preferred safe haven; the dollar becomes a good second best. The euro shows highly sensitive to global negative headlines. Re-markably, even sterling yesterday tried to gain some ground on the euro.