EVENT: Outstanding NFPs Highlight US Resilience

*Pressure cools on Trump to deliver Phase-1
*US Economy flex drives risk-on bets
*EUR feeling the full brunt of the release
*Santa rally plausible if VIX climbs back into its hole

A good day for bulls

Outstanding US payrolls cools pressure on Trump to deliver a phase-1 deal as US resilience shines through. There’s no doubt now that the US economy looks in healthy shape and could gift markets a much-desired Santa rally out till 2019 close. Even when removing the 41k return of GM workers who were on strike, the headline number still holds up as incredibly solid. 

Risk assets climb as US economy flexes

Across the boards, risk-on moves immediately transpired from the release as major equity benchmarks clawed back some earlier-in-the-week losses, anti-risk USDJPY reached for pivotal 109 levels and Gold’s safe-haven status was dismissed to the tune of 0.9%. US 10y Treasury yields also jumped 5bp as market pricing aggressively lowered chances the Fed might cut rates anytime soon. 

EUR sentiment sours on US carry performance 

EURUSD is feeling the full brunt of the release tumbling to 1.105 as investors bet on the relative strength of the US economy versus Europe. The release which came in at 266k vs 180k consensus underpins the idea that US-RoW growth should continue to persist in the near-term. Having broken Euro December support at 1.106, don't be surprised if there's appetite for moves lower into 1.1.

Santa rally likely as volatility climbs back into hole

There were calls earlier-in-the-week amid familiar scenes of uncertainty that volatility at or near all-time lows was due for a rebound. While markets did experience this material uptick - we're now seeing it fold back into the low end of its range. The ultimate gauge of market fear, VIX, trades back at 13.5% off its week high of 16%. The strength of US payrolls could see volatility capped before it even gets started.