8 Nov 2013
Morning outlook: Focus on non-farms, euro remains under pressure
FXstreet.com (London) - Yesterday’s surprising ECB cut of the main refinancing rate by 25 basis points to 0.5 percent hammered the euro (perhaps intentionally). Additional pressure was piled on the single currency this morning by a Standard and Poor’s downgrade of France’s sovereign debt rating for the second time in two years from AA+ to AA. The downgrade came on weak economic growth and high unemployment.
EUR/USD is down 0.22 percent so far today to USD1.3416.
Much of today’s trading is likely to be dominated by US non-farm payroll numbers. The US GDP numbers posted yesterday showed cause for concern and it is unlikely that today’s jobs numbers will do much to ease concerns of US growth. GDP increased to 2.8 percent annualised in the third quarter. However, much of the gains were driven by one-time inventory building and by increases in net exports. With inventory building stripped out, GDP accelerated 2 percent versus 2.2 percent at the same point last year at the beginning of the Fed’s QE-infinity programme of open-ended monthly asset purchases.
US non-farm payroll expectations are low, with the consensus for 120k new jobs. This follows the disappointing print of 148k in September. The weak number is based on the assumption of private sector job losses as a result of cancelled government contracts during the shutdown. Unemployment is expected to inch up from 7.2 percent to 7.3 percent. However, initial jobless claims are were down 9k for the week ending 2 November, giving a hint that non-farm consensus expectations may be overly pessimistic.
In the UK, trade and construction numbers are due. Construction is expected to see a 1.5 percent gain month-on-month, based on strong construction PMIs and mortgage applications. The consensus expectation matches the ONS third quarter GDP estimate.
Trade balance numbers are expected to show further improvement, with export numbers continuing to strengthen from a drop in July.
GBP/USD is trading flat at USD1.6097.
EUR/USD is down 0.22 percent so far today to USD1.3416.
Much of today’s trading is likely to be dominated by US non-farm payroll numbers. The US GDP numbers posted yesterday showed cause for concern and it is unlikely that today’s jobs numbers will do much to ease concerns of US growth. GDP increased to 2.8 percent annualised in the third quarter. However, much of the gains were driven by one-time inventory building and by increases in net exports. With inventory building stripped out, GDP accelerated 2 percent versus 2.2 percent at the same point last year at the beginning of the Fed’s QE-infinity programme of open-ended monthly asset purchases.
US non-farm payroll expectations are low, with the consensus for 120k new jobs. This follows the disappointing print of 148k in September. The weak number is based on the assumption of private sector job losses as a result of cancelled government contracts during the shutdown. Unemployment is expected to inch up from 7.2 percent to 7.3 percent. However, initial jobless claims are were down 9k for the week ending 2 November, giving a hint that non-farm consensus expectations may be overly pessimistic.
In the UK, trade and construction numbers are due. Construction is expected to see a 1.5 percent gain month-on-month, based on strong construction PMIs and mortgage applications. The consensus expectation matches the ONS third quarter GDP estimate.
Trade balance numbers are expected to show further improvement, with export numbers continuing to strengthen from a drop in July.
GBP/USD is trading flat at USD1.6097.