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  • richard evans

Stronger US employment numbers push USD higher, busy economic calendar this week

Good morning

A stronger nonfarm payroll number Friday sent the USD higher. The headline of +199k was good but the greater surprise came from the lower unemployment rate of 3.7% compared with an expectation of no change from the 3.9% last month. GBPUSD traded down to 1.2500, EURUSD to 1.0725 in a knee-jerk move but by the London close both had regained at least part of those losses, trading around 1.2545 and 1.0765 respectively and as I type this morning we are still pretty much at those levels.

Yen has given up last weeks gains with USDJPY now back up to 146.35, indeed we say USDJPY jump from 145.50 to current levels after the London open this morning, yet another move that remains so far unexplained other than unwinding of short term speculative downside USDJPY trades. If I was due to look for downside trades last week, surely I should be doing so now!

Don’t be fooled by the very limited economic calendar today. There is certainly nothing of interest today but the rest of the week is pretty packed including UK unemployment and US CPI tomorrow, FOMC rate announcement Wednesday, BoE and ECB rate announcements Thursday, together with US retail sales, while Friday brings a host of UK, EU and US PMIs. We’ll also get NZ GDP and Aussie employment Wednesday night/Thursday morning. Something for everyone there.

US CPI aside, the rate announcements are likely to be key, not so much the rate decision itself for they are all widely expected to be unchanged. However the accompanying statements will be important, I’d expect all of them to continue to push back against the talk of rate cuts into next year. The Fed ‘dot-plot’ will show latest Fed thinking which is likely to still be behind the market expectations.

Meanwhile Goldman Sachs have said they see BoE cutting rates in August 2024 and continue to do so until mid-2025, targeting a rate of 3%. Just in time for the general election perhaps? Goldmans also bring forward their forecast for the first US rate cut from Q4 2024 to Q3 2024.

In sport over the weekend, Spurs managed their first win since 27th October with a decisive victory over Newcastle. We’re in for a fantastic second half of the season in the Premier League, with arguably eight teams at least fighting for the top four places. Aston Villa are the current heroes, up to third place after beating Arsenal at the weekend, whether they can continue their run of form remains to be seen. Still arguments over VAR continue after more uncertain refereeing decisions.

Obviously our ability to slow things down and analyse them second by second does change our perspective on a lot of decisions and as I have said before, I have sat watching matches with my family and we sometimes have a difference of opinion on a challenge or hand ball despite having seen it slowed down in minute detail, so I do understand how ‘experts’ can get it wrong from time to time, but there are still too many poor rulings for my liking.

Still, i would love to see players booked for surrounding referees, and even sent-off if they do not learn their lesson. Its about the easiest improvement we could make to football, and would set a better example to kids who play the game and grow up believing it is OK to confront the referees.

Hope you had a good weekend, sit back and enjoy perhaps a quiet day ahead of a busy week ahead. We had some pretty lousy weather over the weekend but after today the forecasts suggest it’ll be a bit drier, if not warmer. Oh, and just two weeks to go until Christmas. Which is really one weekend, because no one will want to be shopping on Xmas eve. You have been warned….

- 22.20 RBAs Bullock speaks

- 22.30 AUS Westpac consumer confidence

- 07.00 UK unemployment

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