US Jobs in Focus today

7th June 2019 Market Update

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?? GBP -  The pound briefly struggled again yesterday on Brexit uncertainty following comments from Michael Gove, who said that the 31st October deadline is not a fixed date and that he would approve of taking extra time to get a better deal rather than making the arbitrary deadline the determinant of what a good deal is. Thus putting into question the Brexit timeline further.

Today, focus is on the Bank Of England Inflation forecast which may cause some volatility as future expectations during Brexit will be looked at. In addition, PM Theresa May steps down as Tory Leader today and the race to find her successor will begin.

?? EUR - The ECB yesterday stated that they would be looking at easing monetary policy to fend off moderation in economic growth and declining inflation expectations, though the current forward guidance and levels will likely remain until at least the first half of 2020. There are imminent rate cuts expected, thus movement in the euro was limited given that the markets had already started pricing in a 50% chance of a cut by September 2019.

This morning, French and German industrial production figures have already been released, with German figures missing expectations. In addition, Bundesbank cut its German growth projections this morning from 1.6% to 0.6% for 2019, in addition to slashing its inflation expectations for 2020. Which, will fall inline with the ECB rate cuts expected next year also.

?? USD -  Softer data from the US yesterday saw the dollar lose some ground in the afternoon, with first quarter productivity missing target and a narrowing of trade deficit posted. Though the important takeaway was that US goods shipments to China dropped 20% year to date as multi-front trade wars starts to hurt US data. On the trade war front, president Trump said that he will decide whether to enact tariffs on another USD 325 billion of Chinese imports after the G20 summit at the end on the month, where he is expected to meet Chinese President Xi Jinping and confident of getting a deal done.

Jobs figures with the all-important non-farm payrolls will be the highlight today, with the recent wrath of softer data in the US we could see a lower posting that would see the dollar pressured this afternoon.

Summary:

GBP: Brexit uncertainty rears its head again following comments from Michael Gove
EUR: ECB looks at potential rate cuts but not as soon as expected
USD: Trade wars and softer data starts to weigh on the dollar

 

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