NY Open: NFP all sizzle, no steak
FX Trader, Loonieviews.net
Summary: There was a lot of hype and anticipation ahead of the US employment report but the headline miss, which came along with a 48-year low in unemployment, was met by a muted reaction in the New York markets.
There was a lot of hype and anticipation ahead of the US employment report. It proved to be all sizzle but no steak. Nonfarm payrolls added 134,000 jobs in September, well below the consensus forecast of 185,000 and greatly disappointing to those expecting an upside surprise.
The surprise has been the FX market’s rather blasé reaction to the data.
The US dollar is marginally lower against the major G-10 currencies and unchanged against the Japanese yen since the New York open. However, since last week’s New York close, the greenback has made impressive gains against NZD, (2.22%,) AUD, (2.0%), and JPY (1.67%). EURUSD is down 0.65% while GBPUSD has risen 0.46%.
Next week, FX traders will refocus on US/China developments. There hasn’t been any progress in trade talks, and the anti-China rhetoric has ratcheted higher. There is a chance that USDCNY jumps in response to the recent US dollar strength and rhetoric when China reopens on Monday after a week’s holiday.
There were employment numbers that did surprise to the upside today, but they came from north of the US border. Canada added 63,300 jobs in September beating the forecast for a gain of 25,000 jobs. However, all the gains were part-time which took the bloom off the rose, leaving USDCAD unchanged as of 14:00 GMT.
Wall Street shrugged off the employment report, preferring to keep its eyes on Treasuries. Ten-year Treasury yields are firm at 3.214%, supported by the US unemployment rate touching a 48-year low.
EURUSD continues to bounce inside a 1.1450-1.1550 range since Wednesday. The downtrend that began September 27 following the break of support at 1.1650 comes into play at 1.1550, and while prices are below that level, the target is 1.1450. A topside break would lead to 1.1650, then 1.1730.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.