Good morning
Fridays nonfarm payrolls were pretty shocking, the headline coming in at a mere +12k, some 100k less than expected, while the previous reading was also revised lower. The unemployment rate remained the same at 4.1%, but that wasn’t enough to stop an initial USD sell-off which took GBPUSD up to 1.2980 and EURUSD to 1.0900. We then had a bit of surprising USD strength going into the weekend, GBPUSD closed down around 1.2910 and EURUSD at 1.0830. GBPEUR currently around 1.1900, pretty much half way between the post-budget lows and post nonfarm highs. USDJPY has also been pushed around, closing around 153.00 before slipping to 151.60 overnight, now 152.00.
The open on Sunday night saw a return of the USD weakness, overnight GBPUSD touched almost 1.3000, EURUSD back up to the 1.0900. At this stage I’m not sure if this is down to the US election tomorrow or the potential for another Fed rate cut on Thursday, or a simple case of position squaring ahead of the election.
The US election is difficult to read, Trump remains the bookies favourite even though Harris seems to have a close lead in US polls. Still plenty of talk of election fraud and misinformation, and I think we may all have seen the photos last week of a ballot box in the US that had been set on fire. The fire was sabotage, sure, but the more amazing thing was that the box was just left in the middle of the street for anyone to put anything in. The largest democracy in the world has an odd way of sorting out their voting.
Ironic really that their election takes place on 5th November, the very day Mr Fawkes decided he’d had enough with the powers that be. I’m certainly not advocating blowing up parliament, but I do know that many people I speak to are just horribly fed up with career politicians doing whatever they can to keep themselves in a job regardless of what that means to the country. Will the new Conservative leader, Kemi Badenoch, prove to be more of the same? Or will her no-nonsense and dare I say anti-woke approach stir things up?
Iran is threatening what they call a ‘crushing response’ to the recent attack by Israel, and there has been a suggestion this would not be limited to drones and missiles. Usually when we get such a message we’d expect USD to push higher but we’ve seen none of that as yet, but certainly something to keep an eye on.
Weekend sport saw the England rugby team just fail to beat the all-blacks despite leading until late in the game. Unfortunately the change in fortunes seemed to coincide with me turning the TV on to catch the last twenty minutes or so. In cricket, England had a pretty astounding win against West Indies in the second ODI, chasing down a target of 329 to win with five wickets and a couple of overs top spare.
In football, well I’m obviously a happy man after Spurs came from a goal down to beat Aston Villa, earning Spurs a very important three points without which they’d be languishing below mid-table. Liverpool extend their lead as Arsenal lose and Man Utd and Chelsea draw, while Notts Forest go third after three consecutive victories. Impressive stuff for a team that finished one place outside the relegation zone last season.
So it’ll be a busy week in the northern hemisphere, with the US election and then both BoE and Fed rate announcements Thursday. Both are expected to cut rates 25bps from 5% to 4.75%. Our friends down under have a busty week as well, with RBA rate announcement in the early hours of tomorrow morning and then NZ employment numbers Tuesday night. RBA, one of the more hawkish central banks, is expected to keep rates unchanged, the key is whether they change their hawkish tone into something more neutral.
Have a great day
- 10.00 ECBs Nagel speaks
- 13.30 ECBs Elderson speaks
- 15.00 US factory orders
- 00.01 UK BRC retail sales
- 01.45 China caixin services PMIS
- 03.30 RBA rate announcement
- 04.30 RBA press conference
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