Morning Meeting: Which One is the Driver?

Good Morning.

Asian markets followed the US and European peers heading North in the wake of upbeat US economic data. Japanese Nikkei and Hong Kong's Hang Seng were the Asian drivers, respectively up 1.14% to 9,049.95 and 1.43% higher to 22,135.97, as yen's weakness after the Bank of Japan expanded its asset-purchase program earlier this week boosted Japanese exporters and the Hong Kong Monetary Authority stepped into the currency market to combat the local currency's move to the strong end of its trading range, suggesting investors could be looking to position for a rally in Chinese equities listed in Hong Kong.

Elsewhere in Asia, South Korea's Kopsi added 1.04% to 1,918.14, and the Chinese Shanghai Composite Index traded along the flat line at 2,104.95 or 0.02% higher as investors remain cautious ahead of next week's National People's Congress, due to officially kick off China's leadership change.

On the currency side the greenback inched up 0.16% versus the Yen to 80.26, nearing  four month high of 80.38 hit last week. The yen also eased 0.1 percent against both the Aussie at 83.42 yen and against the euro at 103.81 yen. The common currency during the Asian session traded 0.12% lower versus the dollar to 1.2928$. Reports on manufacturing activity in major euro-zone countries are due today and expected by analysts to show ongoing economic contraction.

But today US Non Farm Payrolls due at 12.30 GMT are under the spotlight;  payrolls numbers are expected to show employers added 125,000 jobs in October and the jobless rate to tick up 7.9 percent from 7.8 percent in September according to Reuters.

On the commodity side, it loos like traders are cutting their bet ahead of the NFP numbers: Oil (WTI) traded 0.46% lower to 86.69$ a barrel and Gold fell 0.41% to 1,708.40$. The rising dollar pressured dollar denominated commodities this morning since it makes them more expensive for holders of other currencies.

The picture we drew this morning has too many  grey areas , Oil falling and Euro heading South are not making us comfortable on the long side of the market, but today's NFP numbers will be the game changer, as you will probably remember we were facing with an Equity/Currency divergence in Europe, and today's Oil move is adding up another variable to our divergence equation.

Which asset will be the driver today?

Today we need to look at the big picture to try to solve the divergence equation.

Have a great day.

Originally posted at www.77sigmatrading.com