Strong US Jobs Data Lifts Dollar as Markets Look Ahead to Inflation
Welcome back, I hope you had a fantastic weekend. Mine was pretty good, plenty of time spent with family and a small gig in London on Saturday evening was something a little different. We saw Davina Michelle, a little known singer but became famous when she covered a Pink song on YouTube which Pink herself commented on. The show was at the Lower Third, a small but very good venue in London.
I won’t dwell on weekend football too much although I’ll have to mention Leeds win over Spurs or Mark will never forgive me. I listened to some of it on the radio and from what I heard Spurs hardly had a look in against a spirited and organised Leeds side. Disappointing, but no more than we’ve come to expect. Arsenal extended their lead at the top with a win over Hull, Man City lost to Forest and Brighton are now in second as their excellent run of form continues. Man Utd v Villa yesterday was a hectic affair, two very early goals for Villa and two very late goals for Man Utd gave a final score of 4-4. Man Utd remain in the bottom three.
In rugby, England dominated an underperforming Australia side with a 45-22 win, scoring seven tries in the process, their highest ever against Australia. England take on Jpaan next Saturday. In F1, Lando Norris won the Brazilian grand prix with Verstappen in second place despite starting in 21st position.
Friday’s nonfarms headline came in much higher than expected at +165k with an upward revision to previous data, while the unemployment rate unexpectedly dipped to 4.1%. US dollar pushed higher while US equities recovered some of the recent losses although it’s fair to say there remains a sense of fragility in the equity markets.
In contrast, Canada’s jobs data disappointed with the net change coming in negative and the unemployment ticking up to 6.7%. With the higher US dollar and lower CAD, USDCAD made a high around 1.4135 from a pre-data area of 1.4055 although this morning the pair is back to 1.4080.
GBPUSD is 1.3415 as I type from a post-nonfarm low around 1.3340. Similarly EURUSD traded down to 1.1130 Friday afternoon but has since recovered to almost 1.1190, which leaves GBPEUR just below 1.2000. Plenty of talk over the weekend about UK PM Burnham’s plans for closer ties with the EU, tying some of that policy announcement with Remembrance Sunday which many found distasteful.
Oil prices remain at the lower end of recent ranges as Trump says renewed strikes are highly unlikely, although he did not rule them out entirely. A diplomatic solution is still preferred despite Rubio saying some Iranian demands are outrageous and ridiculous. Israel have said that although there is a truce at present, they do not consider their battles with Iran as over. Elections in Israel over the weekend has seen Eisenkot given a mandate to form a government after neither his nor Netanyahu’s parties managed to secure a majority. If Eisenkot fails to form a big enough coalition in 60 days, Netanyahu will be given the opportunity to do so.
NZ elections ended with no clear winner, both main parties now looking to form a government through a coalition with other parties. The official result is not likely to be heard until 27th November, for now there is a slightly higher chance that the National Party retain power. NZD has had a decent run sine the open, with AUDNZD down to around 1.2300 and GBPNZD down from Friday’s highs around 2.4175 to the 2.3900 area.
US CPI inflation tomorrow is likely to be the week’s main event although UK preliminary Q3 GDP estimates on Thursday will also be of significant interest. Several central banker speaking through the week including BoEs Bailey later today.
Have a great day…
- 13.40 Feds Bowman speaks
- 15.00 Feds Goolsbee speaks
- 17.15 Feds Barkin speaks
- 17.25 BoEs Bailey speaks
- 23.30 AUS Westpac consumer confidence
- 00.01 UK BRC retail sales
- 03.00 China trade balance