US jobs data supports greenback, Fed minutes this week’s highlight…
On Friday, the US non-farm payrolls report ended up providing the greenback support. The economy added 136,000 jobs in the month of September with the unemployment level ticking down to 3.5%, which is its lowest level since 1969. However, on the flip-slide, wage growth slipped significantly which does not bode well for consumer spending nor the US inflation outlook. On balance, the report was a net positive as the bar was set very low for this release given the shocking data in the early part of last week. The greenback rallied a little on the release but nothing too significant.
This week sees focus remain on the US economy with Fed meeting minutes from their last gathering in September. The central bank cut rates by 0.25% at the meeting but it was evident there was dissent from both the doves and hawks. As a result, it will be important to gather further detail which the minutes will hopefully provide. They’re released on Wednesday evening at 7pm and could spark some volatility across USD pairs.
Outside of this, attention will be closely paid to the next round of US/China trade talks which are set to take place this week. The whole concept of these talks continues to fuel market participant’s frustration at the nature of the current US administration. The stop/start, friend/foe exchanges have created huge levels of volatility across multiple assets classes, making the last couple of years increasingly tough to navigate for investors. No doubt, positive news on the trade talk front will boost stocks and bolster the buck and the reverse if things don’t go quite as planned.
In the UK, Brexit is the main focus as France and Ireland have asked for new proposals from PM Johnson who has been sounding as defiant as ever. Reports over the weekend even suggest he would not leave Downing Street if he lost a no-confidence vote and would wait for the Queen to fire him.
Written by Viv Savani. 8:37am, October 7th 2019
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