While the Non-Farm Payrolls number was quite a disappointment on Friday, falling by -33K for the first contraction in 7 years, and much worse than the hurricane effected expectation of 77K , the rest of the employment data was very solid. The headline unemployment rate dropped to 4.2%, down from 4.4%, the lowest reading since December 2000, while the participation rate increased to 63.1%, up from 62.9%. Importantly, the wage growth figure saw the average hourly earnings jump by 0.5% mm. Despite the poor NFP, a December rate hike from the Fed is now around 80% priced in, with the strong wages growth generally underpinning markets. The dollar initially jumped around after the numbers, with traders seemingly confused by the contradictory data, but ended the day a little lower due to the ongoing fears of an escalation in North Korean tensions. The weaker dollar allowed the metals to squeeze a little higher after making new trend lows, while stocks remained within a range near their all time highs. WTI is back below 50.00 pb and looking heavy. .
Looking ahead, it appears that it will be a fairly quiet start to the week with both Japan and the US out for public holidays on Monday although Spanish politics may pressure the Euro. There will then be little data to be released on Tuesday but things will warm up on Wednesday with the release of the FOMC Minutes from the September meeting, and then on Friday the US CPI and Retail Sales for September are due. There will be plenty of action in Cable too, and aside from the usual Brexit/Political headlines, the UK Manufacturing/Industrial Production, NIESR GDP Estimate and Inflation Report Hearing are all due. China will be back from holidays and will release the September Trade Balance on Friday, while there will also be an IMF meeting commencing on Friday. Today’s focus will be in the Caixin China Services PMI, German Industrial Production and the EU Sentix Investor Confidence Survey. Have a good week.
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