US jobs data strengtherns the US Dollar...
Week Commencing Monday 7th August 2017
US: Jobs just keep on pointing north as Trump hails new economic policy!
The US economy continued its strong summer, adding 209,000 jobs in July while the unemployment rate fell to 4.3 percent, the lowest since March 2001.
The number of employed Americans hit a new high of 153.5 million thanks to a surge of 345,000. The employment-to-population ratio also moved up to 60.2 percent, tied for the highest level since February 2009.
Bars and restaurants provided the biggest boost for the month with 53,000 more positives, while professional and business services contributed 49,000, according to the Bureau of Labor Statistics. In addition to the strong July report, June's 222,000 gain was revised up to 231,000 though May was cut from 152,000 to 145,000.
US stocks plotted a modest advance when markets opened, with the major benchmark indices already sitting near record highs after a stronger than expected earnings season. The S&P 500 rose 0.2 percent to 2,478, led by a rally in bank stocks that took the sector to its highest level in nearly 10 years.
UK: UK growth to remain but lacklustre ... so still in the game!
The UK economy looks set for steady but sluggish growth over the coming months, according to the much anticipated Services PMI survey that showed businesses in sombre mood about their prospects ahead of Brexit.
The figures added to signs that Britain's economy is struggling for momentum after its slowest start to the year since 2012, and bolster the case for the Bank of England to keep interest rates on hold later on Thursday.
The services PMI follows more upbeat numbers on Tuesday from the much smaller manufacturing sector, and weak construction figures on Wednesday. While manufacturing exporters have gained from the fall in Sterling since last year's Brexit vote, Thursday's survey showed consumer facing businesses have been struggling due to a reduction in demand as household budgets are stretched.
Sterling (GBP) - Sterling extended losses against both the Greenback and the Euro last week as markets readjust to lower UK growth expectations. With a limited data set this week, we expect Sterling to remain range-bound, with a bias to the downside. Expect GBP/USD to pivot the 1.30, potentially dropping back into the 20’s. GBP/EUR is hovering above 1.10 and is likely to drop below once again.
US Dollar (USD) - The Dollar recovered slightly from its lows last week after positive US job numbers. Concerns continue to weigh on growth however, with Fed interest rate woes and geo-political issues continuing to push the Dollar back. We expect EUR.USD to continue to trade within the 1.18 pivot, potentially pushing towards 1.19 if the Euro sees decent gains.
Euro (EUR) - The Euro continues its push versus most majors, hitting Sterling hard last week. We expect this trend to continue, with 1.10 firmly in its sights. The Euro continues to be susceptible to Brexit related news, and will continue to react to headlines.
Economic Calander for the Week
We have a light week for the UK with Manufacturing Production on Thursday the only release of note. We expect production to jump up from last month’s disappointing -0.2 percent to a flat 0.0 percent. Aside from this, UK new remains extremely susceptible to Brexit related releases, so we maintain a sharp eye on press reports from Brussels.
We have a busier week for the US, with JOLTs Job Openings for June kickstarting the report on Tuesday. We expect 5.660m openings to be reported versus last months 5.666, which should do little to stoke markets.
Moving to Crude Oil Inventories, we expect supply to decline by -1.527 million barrels, while PPI for July should remain stable at 0.1 percent. Finally, Core CPI on Friday should edge up to 0.2 percent versus last months 0.1 percent increase.
We have no European economic data of note this week, therefore as with the UK we continue to monitor Brexit related news stories in addition to continued Greek debt issues.