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  • richard evans

Lets get US nonfarms out of the way, then enjoy the weekend

Good morning

I’ll keep it brief this morning. We had a ‘small’ post-A level party for my daughter and her friends before they all head off to work or university. All went smoothly but it was a very late night, hence I’m running a bit late.

GBPUSD spent much of the night in a 1.2660-1.2675 range although broke that this morning first to the downside when it tested 1.2640, then to the upside when it tested 1.2690. Now sits 1.2680, not far from where we were yesterday morning. EURUSD had a similar time, trading to 1.2830, then up to 1.0860, settling now 1.0850. GBP continues to hold its ground against EUR, GBPEUR now 1.1685. ECB minutes yesterday highlighted concerns over stagflation, or high inflation and a weak economy.

We have seen a few more changes from China aimed at helping the housing markets, specifically lower deposits and lower mortgage rates. In addition China have cut its RRR from 6% to 4%, with effect from 15th Sept. This has helped push CNY higher with USDCNY trading from 7.2900 to around 7.2500. The fix was down at 7.1788, still some way lower than sensible market levels.

The highlight today will no doubt be the US nonfarm payrolls. We have had a few of the second tier US jobs releases looking pretty soft this week, the time has now come for us to see whether the nonfarms are similarly weak. A headline in the region of +170k is expected, anything weaker should send USD lower, conversely a headline significantly stronger than expected could see USD push higher, although I’m not sure it would be enough for us to test the levels in GBPUSD and EURUSD we saw earlier in the week, when they hit 1.2560 and 1.0765.

A reduction by Banxico, the Mexican central bank, in its hedging program saw USDMXN bounce from 16.73 to 17.10 very quickly yesterday afternoon, MXN did recover some of those losses soon after but this morning the pair is trading higher at 17.13 as European markets digest the information. USDBRL seemed to track it higher as well, trading from 4.88 or so to 4.95. 4.9800 and then 5.00 are both key levels to watch here.

That’ll do for now, Have a great weekend, enjoy the weather which looks pretty decent for the weekend and for next week. Kids are back to school next week so enjoy the slightly quieter rods while you can. Shops likely to be busy over the weekend as parents race to get new unfirms and clothes for kids who have grown over the summer. Otherwise, it’s the end of the transfer deadline tonight, well for Premier league and EFL clubs. Plenty of football action over the weekend, plus the Italian F1 grand prix. Rugby fans will have to wait another week before the world cup begins.

- 13.30 US nonfarm payrolls

- 13.30 CAD GDP

- 14.30 CAD S&P manufacturing PMI

- 15.00 US manufacturing ISM

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