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  • richard evans

Focus on US employment data

Good morning

 

We saw a bit of USD strength yesterday afternoon with GBPUSD trading down from 1.2540 to 1.2470, pretty much the Wednesday lows, before returning again to the mid-1.25’s.   EURUSD also fell from 1.0730 to 1.0675 but is now back to 1.0730.  The key event today is of course the US nonfarm payroll data where a headline in the region of +250k is expected.  Average hourly earnings are expected to drop around to 4% while the unemployment rate should stay at 3.8%.  We’ll also be watching the ISM services PMI which is expected to show a small increase to 52 from 51.4, however the risks must be to downside here.

 

Yen has been showing signs of strength, not so much through direct intervention this time.  USDJPY drifted lower from the high 155s yesterday morning down to a low of 152.75 overnight, and Yen has held the majority of those gains with USDJPY now 153.20.  GBPJPY is 192.10, EURJPY 164.30. 

 

Gold is trading at $2,300, still on edge for signs of escalation in the Middle East.  Goldmans have said they see gold moving higher to $2,700 by the end of the year, quite a forecast and we’d likely need to see ongoing uncertainty in the geopolitical arena, further Chinese official buying and increased talk of US rate cuts, for this to be reached.  Not beyond the realm of possibility..

 

Elsewhere, the Tories are having a torrid time in the by-elections, losing seats to Labour, LibDems, Greens and Independents. It is a clear sign, if one were needed, that the electorate is fed up with the Conservatives and will face a massive uphill struggle if they are to hold onto power in a general election later this year.

 

It is a long weekend in the UK with a bank holiday on Monday.  Of course the weather is looking miserable for the entire weekend, my hopes of a rare round of golf are fading away.  Spurs chances of finishing in fourth place are also fading away after losing to Chelsea last night.  Indeed the three teams below Spurs, Man Utd, Newcastle and Chelsea will be looking at Spurs fixtures, including Liverpool on Sunday, and then Man City, and thinking they will all have a chance to take that fifth spot if results go their way.  Meanwhile the last day of the Championship is tomorrow.  Leeds and Ipswich are vying for second place which brings with it automatic promotion.   

 

There will be no report Monday, normal service to resume Tuesday.  There is no major data on Monday but we do have the RBA rate announcement in the early hours of Tuesday morning.  Rates are expected to stay unchanged at 4.35% but therer is a chance we’ll get some mildly hawkish soundbites from the press conference.

 

That’s all I have for you this morning, have a great long weekend.

 

-  10.00 EU unemployment

-  13.30 US nonfarm payrolls

-  15.00 US services ISM

 

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