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  • richard evans

Will nonfarms spice things up?

Good morning

US dollar is a little weaker ahead of the US employment numbers this afternoon. GBPUSD is at 1.3830, EURUSD up at 1.1880, EURGBP therefore 0.8590 (GBPEUR 1.1640), pretty much unchanged. A headline figure in the region of +750k is expected for the nonfarm payrolls, however I have seen a couple of banks looking for a figure above +850k, while others point to the ADP and think a lower than consensus number could be on the cards.

The question is whether we see a significant dollar move on the release. I’d imagine it would have to be quite a bit higher than expectations to really push the dollar higher, a weaker number probably has more chance of sending USD lower. We also have a host of PMI numbers released today but these are final readings and not expected to be too far away from previous levels, so market impact should be limited.

Japan PM Suga has said he will not be standing for party leadership re-election, effectively resigning as PM, sending the Nikkei up over 2%. That has to hurt. Most people can resign and walk away quietly but for Suga he will be looking at the markets wondering why they have risen so much on news of his departure. Perhaps he bought some Nikkei futures ahead of his announcement to compensate.

Meanwhile a survey shows expectations that ECB will begin to slow asset purchases under PEPP in Q4 and may even close the program before the total entitlement is reached. I still think the various central banks should get together and all give us warning they are going to reduce asset purchases. A coordinated approach would hopefully limit market volatility.

Other news, US are unhappy with Chinas rule about ships accessing South China Seas needing to register with China, they say it infringes international law. NZ look set to tighten mortgage rules to slow house price rises, while the UK are reported to be about to raise NI contributions to help fund NHS and social care.

One piece that did catch my eye was the news Apple may produce a car by 2024. Powered by what is described as a radical battery design, it sounds like Apple won’t build the car themselves but call on an existing car firm to build cars for them. Toyota is the current rumour. I am a bit of a car fan, I guess we used to be called petrolheads, but while I like a good old-fashioned big petrol engine, I am also quite a fan of electric cars and I’m looking forward to see what Apple has to offer. Thinking back to how they redesigned the world of mobile phones, I’m hoping we’ll see something quite ground-breaking.

Covid, focus on the new Mu variant which is being watched by WHO. I remember a while ago reading about viruses that said while new variants may get more transmissible, they tend to be less deadly. I’m not sure we are seeing that with Covid unfortunately, each variant seems more worrying than the previous ones. I doubt e have heard the last of the word ‘Mu’.

It’s a US holiday Monday, labour (labor) day. Before then we have the weekend, hopefully its going to get a bit sunnier and warmer. Our football season gets underway this Sunday with a friendly before the league starts next weekend. That’s the end of my relaxed Sunday mornings for some time to come.

- 09.00 EU markit services PMI

- 09.30 UK markit services PMI

- 10.00 EU retail sales

- 13.30 US nonfarm payrolls

- 14.45 US markit services PMI

- 15.00 US services ISM

- 20.30 CFTC position data

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