daytrade diaries... december 7, page-3

HERE'S OVERNIGHT MARKET UPDATE:

• US bond yields rose sharply on Friday after the US unemployment rate declined unexpectedly, prompting investors to invest in riskier assets and also on concerns that the Fed could start raising rates sooner than initially expected. The 2-year yield increased 12bps to 0.838% and the 10-year yield rose 9bps to 3.478%.

• Australian bond futures moved broadly in line with US Treasuries, although they underperformed at the short end of the curve. The implied yield on 3-year bond futures was up 9bps to 4.850% (price down 9bps to 95.150) and the implied yield on the 10-year bond futures was up 8bps to 5.465% (price down 8bps to 94.535).

• US equities are stronger after the US unemployment rate surprised the market and declined unexpectedly with Geithner’s comments that the job market may improve further. The DJIA gained 0.2% to 10389, the S&P 500 rose 0.6% to 1106 and the Nasdaq was 1.0% higher at 2194.

• European equities rose on Friday on the back of the better then expected US unemployment data. The DJ Euro Stoxx 50 rose 1.2% to 2910 and the German DAX increased 0.8% to 5818. However, the FTSE100 gained just 0.2% to 5322 as miners receded with a strengthening US dollar.

• The Australian SPI 200 Dec 09 futures contract was up 23 points or 0.5% to 4729.

• The USD strengthened against major crosses as a better-than-forecast payrolls report fuelled speculation that the Fed will need to raise interest rates. EUR/USD dipped overnight to a low of 1.4821, opening today’s session stronger above 1.4850. GBP/USD declined steadily late on Fridays session to open the week at 1.6449. USD/JPY made sharp gains amid speculation that Japan’s currency will regain its status as the primary funding currency for higher-yielding investments to open at 90.26.

• It was a mixed session for the AUD on Friday. AUD/USD dipped to a low of 0.9109 but later pared losses and is trading higher at 0.9147. AUD/EUR opens at 0.6156 after a choppy session on Friday. AUD/JPY opens stronger at 82.73, the currency pair making strong gains overnight. A whippy night for the AUD/NZD opening stronger at 1.2789.

• Crude oil dipped below US$76 a barrel for the first time in 7 weeks after a report showed service industries in the US unexpectedly contracted in November, leading to a rise in concerns about fuel demand. WTI futures contract for January fell 1.3% to US$75.47 a barrel.

• Spot gold dipped as the strengthening US dollar eroded the appeal of the metal as an alternative investment. Spot gold decreased 3.8% to US$1,161.40 an ounce.

• LME copper December futures dropped 0.6% to US$7,040 a tonne after inventories monitored by the LME expanded for 23 days. Other base metal futures traded mixed with zinc and lead decreasing 1.7% and 1.8% respectively, while aluminium advanced 0.7%. Nickel remained unchanged.

• US wheat, corn and soybeans declined 2.4%, 3.1% and 0.4% respectively, as the US dollar rebounded, reducing the appeal of commodities. US sugar declined 2.6% on concerns that India may slow down imports. Palm oil futures increased 3.2%.

Please also note that the prices / rates have been updated at 0645 AEST.