Wochenausblick: Arbeitsmarktzahlen im Fokus angesichts durch US-Lockdowns gefährdeter Erholung

Die Earning-Season neigt sich dem Ende zu, aber der Q3-Bericht von Walt Disney wird diese Woche noch im Fokus stehen. Auf der volkswirtschaftlichen Seite halten die RBA und die BoE beide Treffen zur Geldpolitik und die Freitag erscheinenden Berichte zu den Nonfarm-Payrolls drohen die Volatilität der Märkte bis zum Wochenende zu erhalten.

PMIs von Markit, Caixin, ISM auf dem Weg

Eine Reihe PMIs wird diese Woche weitere Informationen zum Zustand der Weltwirtschaft liefern. Abschließende PMIs für Produktion und Dienstleistung werden für die Eurozone, England und die USA erwartet. Der genau im Auge behaltene chinesische Caixin Manufacturing PMI erscheint bereits am Montag, der Services PMI zur asiatischen Sitzung am Mittwoch.

Außerdem erwartet werden diese Woche die ISM Manufacturing- und Nonmanufacturing-Indizes. Vom Nonmanufacturing-Index wird ein leichter Rückgang erwartet, nach dem Ansprung von 12 im Bericht von Juni, bleibt dabei aber stabil im Wachstumsbereich.

Treffen der Reserve Bank of Australia – kommt eine Reaktion auf die jüngste Deflation?

Die Reserve Bank of Australia trifft sich vor dem Hintergrund steigender Coronavirus-Fälle, weltweit und im eigenen Land.

Neue Einschränkungen bedrohen die Wiedereröffnung der Wirtschaft und vor kurzem erschienene VPI-Zahlen legen offen, dass das Preisniveau im Q2 aufs Jahr gerechnet zum ersten mal seit 1997 gefallen ist und der Verbraucherpreisindex den größten Einbruch seit Beginn der Aufzeichnungen verbucht hat.

Die Märkte werden wahrscheinlich von der Politik erwarten, mehr zur Stimulation einer Inflation zu tun. Da Zinsraten effektiv bereits bei null liegen und es kein Interesse gibt noch tiefer zu gehen, lieft der Fokus darauf, ob die RBA jetzt oder in naher Zukunft andere Konjunkturmaßnahmen für nötig hält.

Walt Disney Gewinne

Investoren werden auf drei Schlüsselfaktoren ganz besonders achten im Q3-Gewinnbericht von Disney, der nach Börsenschluss am 4. August erwartet wird. Der Großteil des Einkommens der Firma kommt aus Vergnügungsparks – einige davon sind wieder geöffnet, aber andere bleiben über die ursprünglich angepeilten Eröffnungstermine hinaus wegen steigender Corona-Fallzahlen geschlossen.

Verzögerungen, nicht nur in der Veröffentlichung von Blockbuster-Filmen, sondern auch in der der Produktion, werden einen Einfluss auf das Saldo und Empfehlungen haben.

Disney+ könnte hier einen Lichtblick bedeuten – die Maßnahmen zum Coronavirus haben zu einem raketenhaften Anstieg der Abo-Zahlen für den Rivalen Netflix gesorgt und Investoren werden genau zusehen, ob Disney einen ähnlichen Boom genossen hat.

Bank of England Zinsentscheidung, Inflationsbericht

Der geld- und währungspolitische Ausschuss der Bank of England wird am Donnerstag die jüngsten Entscheidungen zur Geldmarktpolitik bekannt geben.

Chefökonom Andy Haldane sagte vor kurzem dem Treasury Select Committee, dass er glaube, dass sich die englische Wirtschaft um „etwa die Hälfte“ von den riesigen Einbrüchen im März und April erholt hätte, warnte aber davor, dass die Arbeitslosigkeit Höhen erreichen könnte, die man seit den 80er Jahren nicht mehr gesehen hat.

Haldane nannte einige Strategien, die die Bank of England einsetzen könnte, wenn die Politik diese für nötig erachten würde – jedes Wort zu Negativzinsen wäre direkt in den Schlagzeilen, aber die MPC könnten auch zusätzliche quantitative Lockerungen, Credit Easing und Forward Guidance in Betracht ziehen.

Es werden gerade aber keine Änderungen der Zinsrate oder der quantitative Lockerung erwartet. Die BoE wir außerdem am Donnerstag die neuesten Zahlen zur Inflation veröffentlichen.

Nonfarm-Payrolls – verlangsamen neue Corona-Einschränkungen die Erholung des Arbeitsmarktes?

Die US-Zahlen zu Nonfarm-Payrolls werden am Freitag erwartet. Die letzten zwei Berichte haben eine enorme Erholung nach dem Wegfall von 20 Millionen Stellen im April gezeigt, mit 2,7 Millionen neuen Stellen im Mai und 4,8 Millionen im Juni. Ökonomen erwarten die Schaffung 2,2 Millionen zusätzlicher Stellen für Juli zu sehen.

Es ist noch ein langer Weg, bis die USA wieder auf dem Beschäftigungsniveau von vor der Corona-Krise angelangt sind und steigende Corona-Fallzahlen und frische Einschränkungen auf Geschäfte in vielen Staaten könnte sich negativ auf zukünftiges Stellenwachstum auswirken.

Highlights auf XRay diese Woche

Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.

07.15 UTC Daily European Morning Call
12.00 UTC 03-Aug Master the Markets with Andrew Barnett
From 15.30 UTC 04-Aug Weekly Gold, Silver, and Oil Forecasts
17.00 UTC 06-Aug Election2020 Weekly
12.00 UTC 07-Aug Marketsx Platform Walkthrough

Top Quartalsberichte diese Woche

Hier sind einige der größten, für diese Woche angekündigten Quartalsberichte:

05.30 UTC 04-Aug Bayer – Q2
04-Aug Sony – Q1
Pre-Market (UK) 04-Aug BP – Q2
After-Market 04-Aug Walt Disney – Q3
05.00 UTC 05-Aug Allianz – Q2
Pre-Market 05-Aug Regeneron
06.00 UTC 06-Aug Glencore – Q2
06-Aug Adidas – Q2
Pre-Market 06-Aug Siemens – Q3
06-Aug Uber – Q2

Die wichtigsten Wirtschafts-Ereignisse

Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:

01.45 UTC 03-Aug China Caixin Manufacturing PMI
07.15 UTC – 08.00 UTC 03-Aug Finalised Eurozone Manufacturing PMIs
08.30 UTC 03-Aug Finalised UK Manufacturing PMI
14.00 UTC 03-Aug US ISM Manufacturing PMI
04.30 UTC 04-Aug RBA Interest Rate Decision
22.45 UTC 04-Aug New Zealand Quarterly Employment Change / Jobless Rate
01.45 UTC 05-Aug China Caixin Services PMI
07.15 UTC – 08.00 UTC 05-Aug Finalised Eurozone Services PMIs
08.30 UTC 05-Aug Finalised UK Services PMI
14.00 UTC 05-Aug US ISM Nonmanufacturing PMI
14.30 UTC 05-Aug US EIA Crude Oil Inventories
11.00 UTC 06-Aug Bank of England Rate Decision, Monetary Policy Report
12.30 UTC 06-Aug US Weekly Jobless Claims
14.30 UTC 06-Aug US Natural Gas Storage
01.30 UTC 07-Aug RBA Monetary Policy Statement
06.00 UTC 07-Aug Germany Industrial Production / Trade Balance
12.30 UTC 07-Aug US Nonfarm Payrolls, Average Earnings, Jobless Rate

Equities head for strong finish, all eyes on the bond market, NFP jobs report

No V? The lack of a V-shaped recovery may not be worrying stock markets too much, but it is a source concern for consumers who lost confidence over the course of May. Perhaps this was due to the glacial pace of easing of lockdown restrictions and annoyance at the government; or perhaps it was economic – worries about job losses and a big drop in house prices finally sinking in and offsetting the novelty of being furloughed.

Whatever the cause, GfK’s UK consumer confidence index slipped to –36 in the second half of May, down from –34 in the first half and near the –39 printed in July 2008. Meanwhile, Japanese household spending fell even further in April, declining more than 11%. This was the fastest drop in spending since 2001 and built on a 6% drop in March.

Stock markets fell yesterday, pausing what’s been a robust risk-on rally in June, whilst bond yields snapped out of their funk. European stock markets suffered a broad decline. The Nasdaq hit a record intra-day high but ended down 0.7% on the day. The Dow eked a small gain, but the broad S&P 500 index declined 0.34%, though held the 3100 handle after dropping as low as 3090.

European stock markets rebound, eyes on bonds after ECB QE hike

Today, European stock markets rallied back to their highs of the week in the first half hour of trading, with the FTSE rising above 6400 and the DAX at 12,700. Both set to complete a very strong week of gains, with a German stimulus package and ECB bond buying helping to lift sentiment. The DAX’s breach of the 61.8% retracement was a very good bullish signal –  since then, in the last week it has cleared the 200-day line and advanced through the 78.6% level, up close to 10% since last Friday’s close. The FTSE is over 5% higher this week.

Eyes on the bond market again: after being somewhat subdued by central bank actions for many weeks US 10yr yields broke out to 0.85% even as stocks slipped up, whilst 2s couldn’t move beyond 0.2%. I think you have to look deeper into what the central banks are doing here as well as the amount of issuance. The Fed is reducing the pace of asset purchases, but investors think it will need to keep a lid on the front end of the curve for a long time by keeping its target rate at zero.

The move in US yields seemed to be a result of the ECB move to increase QE by a further €600bn. I’m not sure we can draw any immediate conclusions from this sharp move in US rates, but it will be very interesting to watch how the Fed responds to this development. Does it seek to influence the yield curve – yield curve control like the Bank of Japan, or does it let bond markets function?

If investors are dumping longer-dated bonds, and driving up yields, it may be that the inflation trade is on – given the tsunami of issuance and central bank intervention, it is logical enough to expect a bout of inflation coming round the bend, even if the immediate pressures from the pandemic are deflationary. Or it may just be a signal that the bond market thinks the worst of the crisis is over and we can chill out a bit – the move up in yields and drop in the Vix under 25, combined with the rally in equities should all be telling us that things are hunky dory.

When you look at the economic data, however, it’s hard to be to very optimistic. One to watch.

US nonfarm payrolls report on tap

The US nonfarm payrolls print is the last big risk event of the week, and seen at –8m, albeit Wednesday’s ADP number was just –2.76m vs –9m expected. Last month showed a massive –20m drop, but it only really told us what we already knew after several weeks of dreadful weekly initial claims numbers. Yesterday, US initial jobless claims fell to 1.9m but the continuing claims number rose 650k from last week to 21.5, ahead of expectations.

The fact that this number is rising is a worry that either businesses are not rehiring very fast, or worse, workers laid off simply don’t want to go back to work because they earn more now being unemployed thanks to the expanded benefit package. One report indicated about 40% of US workers are better off not working.

WTI oil, Brent oil near highs as OPEC again suggests moving meeting

Oil was near the highs with WTI (Aug) above $38 and Brent (Aug) above $40.50 as OPEC brings its off-again, on-again meeting forward from June 9th to June 6th (tomorrow) – at least that is the current understanding.

At various stages this week it’s been taking place yesterday, next week and not at all. Russia and Saudi Arabia want to get this extension over the line before the start of the new trading week. The meeting taking place on a Saturday does raise the prospect of a gap open on Sunday night.

Dollar unwind continues, euro higher on ECB stimulus

In FX, the dollar continues to get hit in an unwind of the pandemic trade that pushed it aggressively higher. EURUSD has advanced with the ECB stimulus which is going to give the politicians a better chance of agreeing to fiscal stimulus as per the EC’s budget proposals.

EURUSD broke above 1.1350 to trade around 1.1370 – eyes on the 1.1450 target still. GBPUSD is up around 1.2640, near to breaching the 200-day moving average, despite worries about Brexit talks going nowhere and the British parliament rejecting any extension of the transition period. The break by the pound above the twin peaks of the April highs opens up the path back to 1.28 and then 1.31, but the 200-day line offers a big test first.

Candlestick price chart for the pound sterling to US dollar FX pair

Week Ahead: RBA and BoE, Disney Earnings, US NFP

Expect policy decisions from the RBA and BoE, a host more earnings reports, the US nonmanufacturing PMI, and of course the highly anticipated/dreaded April nonfarm payrolls report. Keep track of the biggest market-moving events with the Events Calendar in the Marketsx trading platform. 

Reserve Bank of Australia interest rate decision 

Data is tentatively showing that lockdown measures in Australia might have succeeded in flattening the curve of infections, and several states have already started relaxing social distancing rules.

The Reserve Bank of Australia has previously stated that it believes the economy will begin to rebound once the outbreak was contained, therefore it seems unlikely we will be getting any further stimulus announcements as a result of this week’s meeting. It’s too early to expect the board to start tightening again, but we could see some comments regarding plans to begin tapering the quantitative easing programme. 

Regeneron earnings 

Regeneron Pharmaceuticals is one of the leading companies in the race to find treatments and a vaccine for COVID-19. The stock is up 40% since the start of the year, and is a constituent of our Corona BlendAnalysts are expecting EPS of $5.99 per share – growth of 34.6% on the year. Revenue is forecast up 16% from the same period a year ago at $1.99 billion. 

US ISM Nonmanufacturing PMI 

Last month the US ISM Nonmanufacturing PMI fared much better than expected, clocking in at 52.5 versus the consensus forecast of 43.0. Companies reported a jump in supplier deliveries, with the subindex leaping to 62.1 versus 52.4 the previous month. 

Digging further into numbers, however, it’s clear to see that this helped mask wider weakness. The employment index recorded the largest drop since 2008, tumbling from 55.6 to 47.0, and the business activity index dropped almost 10 points to 48.0. New export orders and imports also collapsed.

April’s report is likely to see the headline number more accurately reflecting the weakness in the sub-indices – some forecasts suggest a drop to as low as 32.0. 

Walt Disney earnings 

Disney’s latest earnings report will be more of a preview than the main event. The company’s second-quarter period ends just a couple of weeks after social distancing measures and business closures were enforced. Like so much of the current data and reports, the rule is to expect bad news now, and brace for even worse to come. 

Business closures and social distancing will have hit Disney from all directions, forcing closures of its parks, curtailing or delaying theatrical releases of its latest films, and hurting demand in its retail stores.

The effect has clearly been significantthe company has already announced that it would slash executive salaries. 

The one positive in the report is likely to be the strong performance of the company’s streaming service, Disney+. The service enjoyed a strong launch, and demand is likely to have been bolstered even further thanks to global lockdowns. 

Guidance for the next quarter won’t be able to answer all investor’s questions – such as whether parks will be able to reopen in time for the busy summer season – but will give details on how the company plans to endure these punishing conditions until the economy gets back to something that vaguely resembles normality. 

PayPal 

PayPal stock has been one of the most resilient of those belonging to the payment processing industry. The company is likely to benefit from a surge in online shopping and demand for online services.

However, PayPal has also announced various measures to support its smaller partners, such as deferring business loan payments and waving certain fees for small business customers who are most affected by the impact of COVID-19. This will hit the company’s bottom line and revenue growth is expected to be negative for the quarter.

Bank of England interest rate decision 

The Bank of England faces the same situation as the Fed and ECB – interest rates are already as low as policymakers are willing to go (for the time being, at least), so it’s unlikely we will see any change to the base rate on Thursday. We could see an increase in the size of the asset purchasing programme, however, or alterations to its short-term repo operations.

The BoE also publishes its latest Inflation Report, which will detail the expected hit to the UK economy from the coronavirus pandemic.  The latest decision and report will be announced at 06.00 UTC on Thursday May 7th, instead of the usual time of 11.00 UTC.

Nonfarm payrolls 

Last month, the nonfarm payrolls report showed a drop of 701,000 jobs in March. The unemployment rate leapt past expectations to 4.4%. The market reaction was muted, however, because everyone from economists to traders knew that there was far worse to come. 

Since the 21st of March, over 25 million Americans have filed jobless claims. Marchs NFP may have been the worst report since 2009, but the numbers will seem trifling compared to those reported for April. 

We’ve seen recently that markets are able to shrug off backward-looking data even if the readings are dire. It was the fear of numbers like these, after all, that saw stock markets posting record declines in Q1.

It is also worth noting that, since late March, the number of Americans filing for new jobless claims has fallen each week, suggesting the worst of the job losses may be behind us. 

But there is a risk that the numbers will be so appalling that markets will have to rethink their already bearish forecasts. 

Heads-Up on Earnings 

The following companies are set to publish their quarterly earnings reports this week: 

Pre-Market  05-May  Thompson Reuters – Q1 2020 
Pre-Market  05-May  Regeneron Pharmaceuticals – Q1 2020 
12.00 UTC  05-May  BNP Paribas – Q1 2020 
By 13.00 UTC  05-May  Fiat Chrysler – Q1 2020 
After-Market  05-May  Walt Disney – Q2 2020 
After-Market  05-May  Activision Blizzard – Q1 2020 
After-Market  05-May  Prudential Financial – Q1 2020 
After-Market  05-May  Occidental Petroleum – Q1 2020 
Pre-Market (Europe)  06-May  BMW – Q1 2020 
  06-May  Credit Agricole – Q1 2020 
  06-May  Societe Generale 
  06-May  Shopify – Q1 2020 
Pre-Market  06-May  General Motors – Q1 2020 
After-Market  06-May  PayPal – Q1 2020 
After-Market  06-May  T-Mobile US – Q1 2020 
After-Market  06-May  Lyft – Q1 2020 
  07-May  BT Group – Q4 2020 
Pre-Market  07-May  Wheaton Precious Metals – Q1 2020 
  08-May  Siemens – Q2 2020 

 

Highlights on XRay this Week 

07.15 UTC   Daily   European Morning Call 
09.00 UTC   Daily   Earnings Season Daily Special 
10.00 UTC   May 6th  Live Market Analysis with Neil Wilson 
12.20 UTC   May 8th  Platform Walkthrough 
12.30 UTC   May 8th  US Nonfarm Payrolls Live 

 

Key Economic Events 

Watch out for the biggest events on the economic calendar this week: 

08.15 – 09.00 UTC  04-May  Finalised Eurozone Member / Bloc Manufacturing PMIs 
04.30 UTC  05-May  Reserve Bank of Australia Interest Rate Decision 
14.00 UTC  05-May  US ISM Nonmanufacturing PMI 
08.15 – 09.00 UTC  06-May  Finalised Eurozone Member / Bloc Services PMIs 
14.30 UTC  06-May  US EIA crude Oil Inventories 
01.30 UTC  07-May  Australia Trade Balance 
01.45 UTC  07-May  Caixin Services PMI 
10.00 UTC  07-May  EU Economic Forecasts 
06.00 UTC  07-May  Bank of England Interest Rate Decision 
12.30 UTC  07-May  US Jobless Claims 
01.30 UTC  08-May  Reserve Bank of Australia Monetary Policy Statement 
12.30 UTC  08-May  US Nonfarm Payrolls / Unemployment Rate 

Week Ahead: Nonfarm payrolls, China PMIs and Eurozone inflation on tap

Welcome to your guide to the week ahead in the markets. China trade talks are ushered in by PMI data, Eurozone inflation results and US nonfarm payroll reports.

US nonfarm payrolls 

The set-piece US labour market report on Friday is the main eco event for market watchers. Signs of a slowdown in employment growth are showing, supporting the doves’ case for further rate cuts. Will we see stronger wage growth though? The NFP report missed expectations on the headline number with employers adding just 130k last month versus the 160k expected. 

China data ahead of trade talks 

The week gets a kickstart with more economic data from China likely to give more clues about the impact of the trade war. The official manufacturing and services PMIs will be followed by the closely-watched private Caixin manufacturing survey in the early hours of Monday. 

Eurozone inflation 

The European Central Bank has cut rates, so what now? Inflation has proved stubbornly weak in the Eurozone, with headline inflation in August of just 1%, while core inflation was a meagre 0.9%. Market expectations for inflation remain subdued. There seems little hope that inflation will start to tick higher and give the ECB some breathing space. Euro area CPI preliminary readings will be delivered on Tuesday morning. 

Brexit 

MPs are back to business, but we don’t know where this leaves the only thing that matters for sterling right now – will there be a deal or not? GBP pairs will remain exposed to headline risk as the market tries to figure out which way the wind is blowing. 

RBA  

The Reserve Bank of Australia is expected to cut interest rates again when it convenes on Tuesday. Speaking last week, governor Philip Lowe gave a very strong signal that rates would be cut again from the current record low 1%.  

Corporate Diary

There are several corporate data releases this week, here are the main ones to put in your diary.

Oct 1stFerguson FY 19 Full Year Results
Oct 1stGreggsQ3 Trading Update
Oct 2ndTesco Interim Results
Oct 3rdPepsicoQ3 Earnings
Oct 3rdTed Baker Interim Results
Oct 3rdH&M GroupQ3 Results

Coming Up on XRay

Don’t miss our upcoming video streams on XRay. You can watch them live directly through the platform or catch-up afterwards when it suits you.

07.15 GMTSept 30thEuropean Morning Call
15.00 GMTSept 30thCharmer Trading talks Forex
15.45 GMTOct 1stAsset of the Day: Oil Outlook
19.00 GMTOct 1stLive Trader Training
18.00 GMTOct 3rdThe Stop Hunter’s Guide to Technical Analysis (part 5)
12.30 GMTOct 4thLIVE Nonfarm Payrolls Coverage

Key Economic Events

There’s a lot of data coming out in the next few days, particularly at the start of the week.

01.00 GMTSept 30thChina Manufacturing and Services PMIs
01.00 GMTSept 30thANZ Business Confidence
01.45 GMTSept 30th China Caixin PMI
08.30 GMTSept 30thUK Final QoQ GDP
12.00 GMTSept 30th Germany CPI Inflation YoY
03.30 GMTOct 1stRBA Interest Rate Decision and Statement
08.30 GMTOct 1stUK Manufacturing PMI
09.00 GMTOct 1st Eurozone Preliminary CPI
14.00 GMTOct 1stUS ISM Manufacturing PMI
12.15 GMTOct 2ndUS ADP Nonfarm Employment
14.30 GMTOct 2ndUS Crude Oil Inventories
08.30 GMTOct 3rdUK Services PMI
12.30 GMTOct 4th US Nonfarm Payrolls

NFP beat dampens rate cut bets, but not by enough

This afternoon’s US non-farm payrolls report was even more closely watched than usual. It is common for traders to get twitchy ahead of arguably the most important monthly data release on the economic calendar, but this was different.

Markets are betting that the US Federal Reserve will cut interest rates when it meets again at the end of this month. Pricing suggests multiple 25 basis point cuts over the coming 12 months.

The Federal Open Market Committee hasn’t exactly been on the same page as the markets for some time, and the latest jobs numbers given strong ammunition with which to defend their hawkishness. Economists expected to see a 165,000 increase from today’s payrolls, after May’s dire reading of 75,000, but in fact the US economy added 224,000 jobs during June.

A slight tick higher in the participation rate saw the unemployment rate inch up to 3.7%, against expectations of no change at 3.6%.

Wage growth, key inflation predictor, slowed to 0.2% month-on-month, and 3.1% year-on-year. In both cases the readings were 10 basis points lower than analysts had expected.

Market reaction to non-farm payrolls

Stock futures tumbled, with the Dow quickly shedding 180 points and the S&P 500 dropping 0.8% following the announcement as markets cut bets on easier Fed policy. US ten-year treasury yields gained six basis points in the space of 10 minutes to trade back above 2%. EUR/USD fell 0.6%, breaking through three levels of support to hit 1.1222, while GBP/USD dropped 0.7% to test 1.2500.

The latest non-farm payrolls have highlighted the disconnect between market expectations for monetary policy and what the economy is signalling is needed. It’s true that growth is beginning to slow, and some data has revealed weakness in areas such as manufacturing, but so far the market is expecting a disproportionate response from US policymakers.

Markets expect three rate cuts between now and April 2020, although bets of four are not far behind. There are no expectations of interest rates remaining in the current 2.25-2.50% range – wise, considering the data and global macroeconomic conditions – while a handful of uber doves have gone as far as pricing in seven cuts by April 2020.

Those expectations are likely to cool in the wake of the latest NFP data, but the market is still convinced that the Fed is about to embark on a rapid cycle of loosening policy. It will take a lot more than one better-than-expected data print before we reach a realistic middleground.

Payrolls day: eyes on wage inflation

Data this week from the US has offered some mixed signals. Employment via the ADP private payrolls number was strong, coming at 275k, well ahead of expectations. One cannot always see a direct correlation between the ADP print and the NFP number, but nonetheless it suggests another print at least in line with the 3-month average. Census hiring might skew the numbers to the upside – prepare for a 250k+ print this time as a result, which could cause a little volatility.

Meanwhile the Chicago and ISM PMIs were soft, coming in around their weakest in two years and suggesting some drag in some employment sectors.

Within the ISM numbers the Employment Index fell to 52.4%, a decrease of 5.1 percentage points from the March reading of 57.5%. The Chicago PMI also highlighted weaker employment, with the decline in demand and production matched by reduced demand for labour. The Employment Indicator fell to its lowest level since October 2017,  and below the three- and 12-month averages.

Earnings focus

PCE figures meanwhile, shows spending accelerated at the fastest pace in almost ten years, rising to 0.9% in March after a 0.1% gain in February. Personal incomes, rose 0.1% in March. Inflation fell to 1.6% from 2%. All told there is perhaps a sense that wages are not squeezing higher as much as expected.

Unemployment shows tightness

On unemployment, initial jobless claims were steady at a seasonally adjusted 230,000 for the week ended April 27th, after jumping 37k the week before, the biggest rise in two years. The four-month moving average of claims has inched up 6,500 to 212,500.

Last month marked a recovery in the headline number as the March figure climbed to 196k from the wobble in February. Wage growth however was much softer than expected, rising 0.1% MoM versus the 0.3% expected. This left annual average wage growth at 3.2%, short of the 3.4% expected which was printed the prior month.

Post-FOMC, the USD is firmer with a push off the 96 handle back towards the 98 handle. For a drive higher for USD we would like require a beat on wage growth more than anything else as big headline jobs number is easy to disregard month to month. In fact it’s hard to get quite as excited about the main NFP print these days, particularly as the numbers can be quite volatile month to month. Focus on the three-month average and the wage data. Also unemployment, should it fall further and highlight further tightening in the labour market will get the Fed’s attention.

GBPUSD is holding the 1.30 handle but a big number on wages may pressure the pair lower and a retreat to the 200-day line around 1.2960.  

Consensus expectations

190k jobs created

3.8% unemployment

+0.3% wages

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Markets.com, betrieben von TradeTech Markets (South Africa) (Pty) Limited („TTMSA”) Reguliert von der Financial Sector Conduct Authority („FSCA“) unter der Lizenznummer 46860.

Nach der Auswahl einer dieser Regulierungsstellen werden die entsprechenden Informationen auf der gesamten Website angezeigt. Für weitere Informationen bitte hier klicken.

Marketsi
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Whether you’re investing for the long-term, medium-term or even short-term, Marketsi puts you in control. You can take a traditional approach or be creative with our innovative Investment Strategy Builder tool, our industry-leading platform and personalised, VIP service will help you make the most of the global markets without the need for intermediaries.

Share Dealing in the Markets Group is only offered by Safecap Investments Limited regulated by CySEC under license number 092/08. We are now re-directing you to Safecap’s website.

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