Good morning
GBP continued to struggle yesterday, with GBPUSD reaching a low just below 1.3100 briefly after better than expected US ISM PMI numbers sent the USD higher. EURUSD also dipped, hitting 1.1010 at one point. GBPEUR hit a low around 1.1860 but by the London close it was back above 1.1900. As I type, USD is a touch softert, GBPUSD at 1.3145, EURUSD 1.1030.
In terms of US employment numbers, initial claims were a tiny bit above expectations, challenger job cuts were a smidge lower, as was the ISM employment index. Not much to take away from that as we await this afternoon’s main event, the US nonfarm payrolls.
Otherwise the markets are watching geopolitical risks closely. Talk of possible Israeli attacks on Iranian oil facilities has pushed oil prices higher, up some 12% or so from the weeks lows. Not only that, reports have said Israel attacked a Russian base in Syria, I have since seen suggestions Putin has warned all Russians should leave Israel, however to be honest I’m not convinced that last piece of news is actually true. Still, an Israeli attack on Russia is quite a big step, some that many are saying is a mistake.
Meanwhile Israel continues to hit targets in Beirut as it seeks out more Hezbollah members. Does make me wonder just how many weapons Israel has stockpiled. There must be thousands and thousands sitting somewhere.
So, to the nonfarms this afternoon. A headline in the +140k region is expected, although I have seen a couple of the bigger banks looking for a larger headline. It should be a simple case of the higher the headline, the higher the US dollar moves, and vice versa. Mind you I have already seen some banks looking ahead to next weeks US inflation numbers, with a view that better US employment numbers today and a higher inflation reading next week is likely to lead to further USD strength. Equally I have seen others who see a lower headline, down in the +70k area, plus an increase in the unemployment rate. We’d see USD weakness were that to be the case. So, a real mix of opinions. Great minds obviously don’t always think alike.
This afternoon we’ll also hear from BoEs Pill. It will be interesting to see what he has to say, particularly given Bailey’s comments yesterday that triggered the GBP decline. It is possible the market has got ahead of itself after Bailey, perhaps Pill will shed a bit more light on current thinking.
Spurs scraped another win yesterday in the Europa League, but the exciting match was Porto v Man Utd which ended a 3-3 draw after Porto came behind from 2-0 down to take a 3-2 lead, only for Utd to equalise in injury time. Back to premier league action this weekend, Spurs take on Brighton, while Sundays match between Villa and Man Utd could be the pick of the bunch.
We had a little sunshine yesterday and more is forecast for today and tomorrow. It doesn’t look like it’ll last so make the most of it when you get the chance.
Have a great weekend as and when it comes.
- 11.00 ECBs de Guindos speaks
- 13.30 US nonfarm payrolls
- 13.55 BoEs Pill speaks
- 14.00 Feds Williams speaks
- 14.10 ECBs Elderson speaks
- 15.00 CAD Ivey PMI
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