Friday was a choppy session for the currency and stock markets but most pairs ultimately ended not too far from where they had started the day despite the very strong NFP figure of +304K, well above expectation of 165k. However, the prior month’s figure was revised sharply down from 312k to 222k while the headline unemployment rate rose back up to 4.0%, versus expectation of 3.8%, and wage growth had a bad miss on expectations, with the average hourly earnings only growing by 0.1% mm versus expectation of 0.3% mm. The labor force participation rate rose to 63.2%, up from 63.1%. The USS is mixed; higher against the Jpy and Cable but pretty much unchanged elsewhere. Stock markets bounced around but ended flat, as did Gold, although Silver fell by 1%. Wall Street was held in check, despite the strong NFP, by a weaker-than-expected outlook from Amazon which battered retail stocks and led the Nasdaq down by 0.4%. The DJI and the S+P were flat. The main beneficiary from the jobs data was oil, with WTI up by 2.7% on the back of the NFP, but also aided somewhat by Donald Trump’s offer to meet his Chinese counterpart Xi Jinping for a second time since December to keep alive a trade war truce that expires on March 1.
Looking ahead, it is going to be a busy week, with the major focus being on the Interest Rate Decisions to come from the RBA and the BOE, but with plenty else aside to focus on. Both are expected to stay on hold although the BOE may have a hawkish bias – but are somewhat hamstrung by ongoing Brexit woes – while the RBA are likely to have a dovish lean (Buy GbpAud?!)
China NY celebrations will see much of Asia out for the week, but Monday will begin with the Australian Building Permits, TD Inflation and ANZ Job Ads, while the findings of the Australian Banking Inquiry will also be released, and then later the Sentix EU PPI and the US Trade Balance for January are both due. Tuesday will be a big one for Australia, with the release of the Performance of Services Index, Retail Sales, Trade Balance as well as the RBA Interest Rate Decision, while the rest of the session will be spent focusing on the Services/Composite PMIs. Wednesday will see the US SOTU address from Donald Trump – during the Asian session – while Thursday will focus on the BOE Meeting/Statement/Minutes/Vote Count/APP Facility. Finally Friday will wrap up with the RBA Statement of Monetary Policy, and from Europe, the German Trade Balance, Current Account and UK GDP, while the US will be thin with just the Michigan Consumer Sentiment Index to provide guidance.
Economic data highlights will include:
Mon: NZ Building Permits, Australian Building Permits, TD Inflation, ANZ Job Ads, Japan Services PMI, EU Sentix Investor Confidence Survey, UK Construction PMI, EU PPI, US Trade Balance, Factory Orders
Tue: Australian AIG Performance of Services Index, Australian Retail Sales, Trade Balance RBA Interest Rate Decision, EU Services/Composite PMIs, EU Retail Sales, US Services PMI, ISM Non-Mfg PMI
Wed: NZ Holiday, Donald Trump SOTU address, German Factory Orders, US Goods Trade Balance, Non-Farm Productivity, Global Dairy Trade Index, EIA Crude Oil Stocks Weekly Change
Thur: NZ Unemployment, AIG Performance of Construction Index, Japan Leading Economic Index, Coincident Index, German Industrial Production, BOE Meeting/Statement/Minutes/Vote Count/APP Facility, NIESR GDP Estimate, US Consumer Credit Change, Jobless Claims
Fri: Japan Trade Balance, Current Account, Eco Watchers Survey, RBA SOMP, German Trade Balance, Current Account , UK GDP, Michigan Consumer Sentiment Index , Baker Hughes Oil Rig Count
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