Friday was a wild ride in all markets following the US Jobs data which saw the US NFP rise by 250k, beating expectations of 190K, unemployment rate at 3.7%, average hourly earnings rose 0.2% mm, and 3.1%yy, the first time that it has been above 3% since 2009. The participation rate rose from 62.7% to 62.9%, indicating that more people are looking for work, a positive sign. The only dent in the data was the September figure, which was revised down from 134k to 118k, although this does little to keep the Fed on their stated path of another hike in December and possibly another 3-4 in 2019.
US stocks ended the day down around 0.5%-1.0%, with the S&P 500 down 17 points (0.6%), although on the week the index was up 2.4%. The US$, under pressure heading into the data, recovered some of its poise and finished with a bit of a recovery against all the major counterparts, but still below the highs seen last week. The DXY ended the week at 96.47, well above Friday’s low of 96.00 but below the week’s high of 97.20. In the bond market, yields soared on Friday, with the US10Y finishing at 3.218%, which should be supportive for the dollar heading into the new week, and even more impressive, the long bond (US30Y) ended the week at 3.461%, last seen in July 2014.
The metals were choppy in a tight range, while WTI continued its fall, down another 1.33%, heading to 6 month lows as the US softened its crackdown on Iranian exports and American supplies surged, easing concerns of an impending shortage.
The coming week will be busy, with the main event being the US midterm elections (Tue), which are pretty much likely to drive the direction for the whole week especially if there are big changes to either the upper/lower house. Trade negotiations between the US/China, Brexit and Italian Budget headlines will also remain close to the surface in terms of traders focus, while in terms of economic data, other highlights will the RBA Meeting Interest Rate Decision (although note that it is Melbourne Cup Day and there will be a Statement only. No changes are expected), the RBNZ Meeting (Wed) and the FOMC (Thur), where there will also only be a statement and no change is expected ahead of the 25bp rise that has been written in for December.
Other Economic data highlights will include:
Mon: AIG Performance of Mfg Services Index, BOJ Minutes, TD Inflation, ANZ Job Ads, Caixin China Services PMI, EU Sentix Investor Confidence Survey, UK Services PMI, US Services PMI/Composite PMI, ISM Non-Mfg PMI
Tue: UK BRC Retail Sales, Japan Services PMI, RBNZ Inflation Expectations, RBA Interest Rate Decision/Statement, German Factory Orders, EU Services/Composite PMIs, JOLTS, Global Dairy Trade Index, API weekly Crude Oil Stock Inventory
Wed: AIG Performance of Mfg Construction Index, NZ Q3 Unemployment, German Industrial Production, ECB Non-Mfg PMI, EU Retail Sales, EIA weekly crude oil stock change, US Consumer Credit Change
Thur: RBNZ Meeting/Interest Rate Decision, Japan Current Account, Machinery Orders, Eco Watchers Survey, China Trade Balance, German Trade Balance, EU Economic Bulletin/Growth Forecasts, FOMC Meeting/Interest Rate Decision
Fri: Australian Home Loans/Investment Lending for Homes, China CPI, UK Manufacturing/Industrial Production, Provisional Q3 GDP, Trade Balance, US PPI, Wholesale Inventories, Michigan Consumer Sentiment Index
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