Johnson takes centre stage
US markets had a good day yesterday but Asian markets didn’t follow. The usual factors are to blame, although add into that higher US 10 year yields which reached close to 1.6%, leading to a higher USD. As I type EURUSD is 1.1570, GBPUSD 1.3580 and EURGBP 0.8520 (GBPEUR 1.1735).
US ADP employment number is due out today, never the greatest indicator for nonfarms but you may remember last month the ADP disappointed, a couple of days later the nonfarm headline was also lower than expected. Indeed, back in September I mentioned that ADP could be a better indicator not for the nonfarm release immediately following, but the month after. If so we’re in for another disappointing nonfarm headline this Friday. Lets see what the ADP brings later today.
Lagarde followed the usual script when she spoke yesterday, saying monetary policy cannot directly control supply shortages or high energy prices, instead ECB are focussing on wages and inflation expectations. EU retail sales numbers due out later this morning, EU leaders are meeting today but EUR not likely to be affected.
RBNZ raise rates 25bps as expected in an attempt to lower inflation but also get house prices under control. Further rate rises next year are likely. After a very quick blip higher, NZD is actually a little lower now with NZDUSD at 0.6900, and AUDNZD up at almost 1.0500.
China still out on holiday but remains in the news. China President Xi will not be attending the G-20 meeting later this month in Rome although there is a suggestion US and China officials may have a high-level meeting in Switzerland. Some reports suggest Xi and Biden have agreed to abide by the Taiwan agreement, although the quotes I read seem more like Biden saying he expects China to abide by the agreement, I didn’t see China agreeing to anything.
A fairly light looking calendar, focus no doubt will be on UK PM Johnsons speech at the Conservative party conference where it is suggested he will hold more of a US style rally than a simple speech to a room full of supporters. Like him or loathe him, there should be some entertainment to be found.
- 09.30 UK markit construction PMI
- 10.00 EU retail sales
- 11.30 UK PM Johnson speaks
- 13.15 US ADP employment