Saturday, 3 November 2018

UNITED STATES EMPLOYMENT REPORT SHEDS DOUBT ON US GROWTH DOWNTURN

The expectations that we should prepare for a potential downturn in growth from the United States economy were nowhere to be seen in the latest employment report, with another impressive 250,000 jobs added during October.

This is another striking headline jobs reading out of the United States that highlights to everyone once again the US divergence story, where the economic progress within the United States when compared to its developed counterparts is massive.

The employment report has narrowed some of the losses that the Dollar was carrying earlier during Friday trade, but the USD is still broadly lower against most of its counterparts following the promising reports of a potential breakthrough in United States-China trade talks.    

Out of the 31 expanded majors on the Bloomberg Terminal at time of writing, only the Canadian Dollar, British Pound, Japanese Yen and Russian Ruble are lower against the Dollar today. The 0.15% weakness in the British Pound is probably related to the sudden surge in the Pound yesterday on Brexit hopes suffering from over-exhaustion, while the Yen is lower due to improved risk appetite in global stocks.

As we look ahead to the next trading week, investors must prepare for a potentially very busy one in the FX markets. Global markets will remain very sensitive to any new headlines over eased potential trade tensions, while investors also need to prepare and monitor possible risks with the US mid-term elections next week.

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