Markets quiet ahead of nonfarm payrolls

Good morning

Equities were mixed and oil prices made gains yesterday as it emerged a deal between Iran and Oman over the Strait of Hormuz was not quite what was hoped, containing bans for US and Israeli ships among other conditions. It remains clear that we are a long way from getting a peace deal that Trump insists Iran is desperate for.  Indeed Trump is approaching the point where he either has to go all out against Iran or back down completely.  Meanwhile there are reports that Iranian backed militia may be preparing attacks on Saudi Arabia.

China trade numbers overnight showed a $112bn surplus, a little above expectations.  The US dollar is very slightly higher, GBP and EUR are currently 1.3450 and 1.1520 against USD, putting GBPEUR around 1.1670.  USDJPY has crept higher, reaching as high as 158.50 overnight, Ueda’s slightly more hawkish line ahead of September’s BoJ meeting having little impact on Yen.  Markets are of course still wary of further intervention but so far both Japan and US are staying quiet.  On the subject of intervention, it transpires that the ECB were not informed that US would be selling Euros to prop up the yen in recent intervention, something the ECB says is a contravention of central bank understanding.

The mildly stronger USD comes as yet another Fed official, this time Musalem, gave some hawkish comments along the lines of ‘inflation is too high, economy and labour market is resilient, favoured raising rates at recent FOMC meeting’.  Still, markets remained reasonably quiet ahead of today’s nonfarm payroll numbers.  Forecasts are for a headline around +80k and an unchanged unemployment rate of 4.2%. 

Not much on the sporting calendar over the weekend, which is good actually given that I have a load of work to catch up on in the garden which has been a bit neglected for a couple of weeks, no surprise given my recent raft of mini-breaks.  It’ll be a hot weekend, up in the 30’s on Sunday, so I’ll get as much done on Saturday as I can. 

Next week brings UK GDP, US CPI, PPI and retail sales, as well as the latest RBA rate announcement and RBNZ inflation expectations.  RBA are widely expected to leave rates unchanged next week.

Have a great day, and a great weekend as and when it comes…

-  13.30 US nonfarm payrolls

-  13.30 CAD employment

-  15.00 CAD Ivey PMI