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  • richard evans

USD find support from US employment data

Good morning

A headline nonfarm payroll number of +263k and an unemployment rate down t0 3.5% gave USD an end of week boost Friday, even though the average hourly earnings ticked a fraction lower. GBPUSD is now 1.1100, some 100 pips lower than the pre-release level, EURUSD is 80 pips lower at 0.9720, while USDJPY has been driven to 145.65 overnight, just 20 pips or so short of the level we saw Japan intervene just over two weeks ago.

The data is good enough to keep USD buyers happy and it seems that anyone hoping to see the Fed change their recent rhetoric will have to wait a lot longer. Expect Fed officials speaking this week to keep offering the same ‘still as lot to do’ message. US equities fell sharply Friday and Asian markets followed suit overnight, China markets hit hardest on their return from their holiday, not helped by a rise in Covid cases which could well lead to more lockdowns as China maintain their zero Covid policy.

The future of the UK looks uncertain as Scotlands Sturgeon forges ahead with work on a second independence referendum, while Irelands Varadkar has been talking about reunification being closer. With the passing of the Queen, the potential for change in the monarchy must be greater as well. I think we are in for some interesting times.

Putin has called the attack on the Kerch bridge an act of terrorism and has accused Ukraine of planning the blast, leading to what looks like a retaliatory strike on infrastructure and apartment blocks across Ukraine. The bridge links Crimea to Russia and Russian military officials look upon any attack on the bridge as a significant event. Putin will hold a security council meeting today and I fear we could see further retaliation in the coming days.

It is a US holiday today, Columbus day. This would usually lead to lower volumes and a quieter market as the day draws on. I do think we are likely to see continued demand for US dollars and continue to look for low risk USD purchase trades, with a degree of protection built in to assist should USD weaken over time. Unlikely perhaps, but with USD at elevated levels it is prudent to be prepared should we see a turn.

We have seen a rather wet start to the week, hopefully it will clear up later. I was rather hoping to get the grass cut later if the markets turn quiet but I’m not going out if its like this!

One final point., My football team, now U16s, lost at the weekend in our third league match of the season. Incredibly, this is the first loss in the league for the team since May 2021. We almost equalised with the last kick of the game, but it was not to be. It had to come to an end sooner or later, we knew this season would be tough having lost some influential players, but we’ll just have to regroup and look forward.

- 14.00 ECBs Lane speaks

- 14.00 Feds Evans speaks

- 18.35 Feds Brainard speaks

- 00.01 UK BRC retail sales

- 00.50 Japan current account

- 07.00 UK unemployment


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