Daily Market Commentary
US Non-Farm Payrolls beat expectations, adding 272,000 jobs, substantially higher than the expected 185,000. This was good news for what has been a quickly deteriorating US economy, but bad news for the prospect of Fed interest rate cuts. The labour market in the US has been easing of late, as the fall into recession gains momentum, with US GDP plummeting. This jobs number contradicts this narrative, which is good news, but the recession is a required pre-requisite for the defeat of US inflation. The coming week will be dominated by growth and inflation and the impact this has on interest rates. The deteriorating US economy has added enormous political pressure to the Federal Reserve to cut interest rates, but stubborn inflation is a massive stumbling block. The Fed will consider all of this in the coming week and probably continue hold on to the current tight monetary policy. The Bank of Japan is also set to meet and decide on interest rates, following key data set to be released earlier in the week, involving GDP growth. GDP numbers may confirm Japan is in recession, which will ensure the enaction of the Bank of Japan, although narrative will be key. The Non-Farm Payroll number triggered a spike in US Bond Yields supporting a stronger US Dollar, forcing the EUR back to 1.0800, while the GBP dropped back to 1.2700.
The surging in the reserve wiped out recent gains in commodity currencies, with the AUD crashing back below 0.6600, while the NZD slumped to 0.6100. The coming week will be dominated by speculation surrounding the Fed IRD and the reading of inflation and growth rates in Europe and the US.
Weekly Market Calendar
10/6 Australia Kings Birthday Holiday, Japan GDP
11/6 Australia Business Confidence, Dutch CPI, UK Employment, NFIB Small Business Optimism
12/6 Japan PPI, China CPI/PPI, German CPI, Norway GDP, Japan GDP/Industrial Production/Manufacturing Production, US Weekly Mortgage Applications, US CPI, German Current Account
13/6 FOMC Meeting IRD, NZ Credit Card Spending, UK House Prices, Australia Consumer Confidence, Australia Employment, German Wholesale Prices, Spain CPI, EU Industrial Production, US PPI, US Weekly Jobless Claims
14/6 NZ Business PMI, NZ Food Inflation, Bank of Japan IRD, Japan Industrial Production, France CPI, Austria CPI, EU Trade, University of Michigan Economic Sentiment
PLEASE NOTE THE VIEWS EXPRESSED IN THIS COMMENTARY ARE THOSE OF THE AUTHOR AND NOT COLLINSON & CO
Paul Bettany I Collinson Forex Limited Collinson & Co. Private Banking
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