Another impressive jobs report from the US on Friday has provided a boost to risk sentiment. Surprisingly, it has not translated to a stronger dollar. The US economy added 128,000 jobs in the month of October with September’s numbers revised higher by nearly 50K. Wages and unemployment remained relatively constant making this a very decent report given the huge amount of concern.
The market’s response was to purchase risk assets. Stocks were bought while bonds were sold. The greenback initially saw some buying but this fizzled out soon after the release. With the Fed now injecting significant volumes of liquidity overnight plus a reduction in interest rates of 0.75% the market appears to be less keen to hold onto US dollars The Fed’s balance sheet is already well on its way to $4 trillion once again.
This week sees more focus on the UK as a new Speaker of House is chosen. It’s likely the current favourite, Lynsey Hoyle, is picked. Parliament will then be dissolved on Wednesday in the run up to the 12th December election. Outside of this, the Bank of England will host a monetary policy announcement in conjunction with their quarterly inflation report.
Written by Viv Savani. 8:34am, November 4th 2019
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