Good morning
US jobless claims have, in all the time i’ve worked in finance, never been one of the key releases. However, yesterday they came in a touch under expectations and it seemed to convince the market that a hard landing for the US economy was less likely, USD pushed higher as interest in larger Fed rate cuts waned, while equities pushed higher and all of a sudden the panic was over. Really? Seems a lot to pin on one piece of weekly economic data.
Asian equities ended generally higher, futures prices point to higher equities in Europe this morning as well. We’ve seen the US dollar weaken since, the better risk sentiment reversing the moves we saw earlier in the week. GBPUSD had traded as low as 1.2670 after the release, EURUSD slipped to 1.0880, but they have since made gains, currently 1.2765 and 1.0925 as I type. GBP has been the winner here, with GBPEUR pushing up from just below 1.1600 yesterday morning to 1.1685.
Quite why GBP has benefitted more is a bit of a mystery although it could be a simple case that it had suffered more on the way down and therefore should gain more on the way up. Some logic in that.
Some Fed officials have been speaking on US rates, some are dovish. Schmid says a rate cut will be appropriate if inflation continues to come lower, Barkin says the Fed have time to decide how much they will need to cut. However Goolsbee has said he’s not sure a rate cut before the election is a good idea, preferring to take in a bit more employment data before making a decision. Trump meanwhile has said on CNBC that the President should have a say in interest rate decisions and that he, as a successful businessman, has a better instinct for these things that many people at the Fed. Oh dear.
With limited economic data today, just Canadian employment numbers on the calendar, the markets could well settle down and reflect on the turmoil earlier in the week and be thankful it seems to have passed. Incredible how we ignored a 12% decline in the Nikkei, and almost ignored the rally that followed that has seen it back up to 35,000.
So, what else to watch? Well the Olympics of course, where GB’s Johnson-Thompson will be looking to hold her lead in the heptathlon with three events to go. More climbing on offer, not the speed stuff but the boulder climbing which sees competitors scale impossible looking walls to earn points, 4x400m relay heats and 4x100 finals, a couple of my favourite events. This afternoon I think we may have break-dancing, which I am sure will look spectacular but I’m not convinced it should be an Olympic sport.
Speaking of Olympic sports, did anyone see the synchronised swimming, or artistic swimming as I think it is now known. Always something of a laughing stock, but I have to say I caught some of it and was absolutely mesmerised. Well worth looking up the US and Chinese displays, silver and gold medallists respectively.
I mentioned yesterday how close we are to the start of the new football season. The Championship kicks of today, as do League One and League Two. Tomorrow the two Manchester teams play in the Community Shield, City looking for revenge over their FA cup defeat to their local rivals.
The weather is going to be good over the weekend. I need to get out and mow the lawn which has been neglected since I had my shoulder operation and as such will be a pretty big job. If I can get that done tomorrow I might treat myself to a day of rest on the 30°c temperatures forecast for Sunday.
Have a great weekend
- 13.30 CAD unemployment
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