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- U.S. jobs data due in the coming week may hold the key to whether the Federal Reserve will raise interest rates for the first time since 2006 in December, signaling its intention to end an era of almost-free dollars. An increase in Fed rates would have consequences well beyond U.S. borders, increasing borrowing costs for dollar debtors in emerging markets, pushing up the greenback against some major currencies and driving a global reallocation of investment money. The Fed, which has a dual mandate including inflation and employment, put a December rate hike firmly in play in the past week and investors will be scrutinizing Friday’s U.S. employment data to work out the odds of such a move. Analysts polled expect U.S. employers outside the agricultural sector to have added 180,000 jobs in October and overall earnings to have increased by 0.20 percent during the month. Financial markets are pricing in a 50 percent probability that the Fed will increase its main interest rate to 0.25 percent or even 0.50 percent from the current 0.125 percent on December 16, according to data compiled by CME group. The state of the U.S. labor market is not the only concern for the Fed, which made an explicit reference to “uncertainty abroad” when it decided to hold rates steady in September. A survey due on Monday is expected to show activity in the U.S. manufacturing sector marked time in October, losing further momentum from the month before.
- Asian stocks slid on Monday after soft Chinese factory surveys stoked global growth concerns, while the dollar edged back against the safe-haven yen as risk appetite waned. State media reported police had arrested two executives from a Hong Kong-owned fund which allegedly pocketed hundreds of millions of dollars from irregular futures trades. China’s factory activity fell for an eighth straight month in October, the Caixin purchasing manager’s index (PMI) showed, fuelling fears the economy may still be losing momentum in the fourth quarter despite a raft of stimulus measures. The official Purchasing Managers’ Index(PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0, according to the National Bureau of Statistics(NBS). A reading below 50 points suggests an contraction. New export orders contracted for a 13th straight month, though the sub-index for new orders – a proxy for both domestic and foreign demand – edged up marginally to 50.3, compared with September’s 50.2.
- Nov 2 Japanese manufacturing activity in October expanded at the fastest pace in a year as new domestic and export orders increased, a private business survey showed on Monday. The Markit/Nikkei Japan Final Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.4 in October, slightly less than a preliminary reading of 52.5 but a solid improvement from the final reading of 51.0 in September.
- Oil prices fell in early trading in Asia on Monday as analysts expected weaker demand from China in upcoming months. Monday’s falls came after gains made last week following a further decline in the U.S. oil rig count which indicated that domestic crude production could drop in coming months. But in Asia, the possibility of slowing demand in China dominated trade on Monday, with growth faltering in China. Barclays said that China’s oil demand growth for September, adjusted for inventories, slowed to 226,500 barrels per day (bpd), or 2.1 percent, compared with the same month last year, much lower than the 6.3-percent gain registered for the first three quarters of the year.