U.S Nonfarm Payrolls and Chatter on Trade Puts the Dollar in the Spotlight

It’s a busy day ahead for the markets, with labor market data out of the U.S and trade in focus. PMI data out of China early on supported risk appetite.
Bob Mason

Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

Key stats included October manufacturing PMI numbers out of Australia and China, along with 3rd quarter wholesale inflation figures out of Australia.

Japan’s job/application ratio for September was of less influence on the day.

Outside of the numbers, negative sentiment towards trade from Thursday spilled into the morning session to limit risk appetite.

For the Japanese Yen

The Jobs/applications ratio fell from 1.59 to 1.57 in September. Economists had forecast for the ratio to hold steady at 1.59.

The Japanese Yen moved from ¥108.021 to ¥107.990 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% to ¥108.04 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index slid from 54.7 to 51.6 in October.

According to the latest AIG report,

  • Ongoing solid growth in food and beverage manufacturing provided much-needed support in October. The sector’s PMI rose by 1.3 points to 61.8.
  • Manufacturers who sell to the mining and defense sectors also found support, while those selling to the non-food retail and construction sectors struggled.
  • The new orders sub-index slid by 8.8 points to 51.7, while the production index rose by 5.7 points to 52.8.
  • Exports also found support, with the sub-index rising by 2.2 points to 52.4.
  • Employment and wage growth were negatives, however. The employment index fell by 4.8 points to 52.9, with average wages falling by 4.5 points to 60.0.

The Aussie dollar held steady at 0.68919 upon release of the figures that preceded wholesale inflation figures the manufacturing PMI numbers out of China.

In the 3rd quarter, the Producer Price Index rose by 0.4%, quarter-on-quarter, which was in line with expectations. In the 2nd quarter, the index had also risen by 0.4%. The annual rate of wholesale inflation eased, however, from 2% to 1.6%. Economists had forecast an annual rate of inflation of 1.8%.

According to the ABS,

  • Quarter-on-quarter, support came from rising prices for heavy and civil engineering construction (+0.6%), Dairy product manufacturing (+4.1%), and sheep, beef cattle and grain farming, and dairy cattle farming (+5.2%).
  • A fall in petroleum refining and fuel manufacturing (-3.9%), other transport equipment manufacturing (-2.0%), and other agriculture (-1.0%) weighed.

The Aussie Dollar moved from $0.68842 to $0.68884 upon release of the figures that preceded China’s manufacturing PMI numbers. At the time of writing, the Aussie Dollar was up by 0.17% to $0.6906.

Out of China

The Caixin Manufacturing PMI rose from 51.4 to 51.7 in October, coming in ahead of a forecasted 51.0.

According to the October PMI Survey,

  • New orders expanded at the quickest pace since January 2013. Demand domestically and from overseas drove the uptick in new orders.
  • Purchasing activity accelerated at the quickest pace since February 2018, supported by strong demand.
  • Employment fell again, in spite of rising orders, leading to a pickup in backlogs.
  • Optimism towards the year ahead rose to its highest level since April, whilst remaining subdued by historical standards.

The Aussie Dollar moved from $0.68984 to $0.69094 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.36% to $0.6436.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats will leave the markets to focus on stats out of the U.S later today, the UK general election campaign trail and any chatter on trade.

At the time of writing, the EUR was up by 0.09% to $1.1162.

For the Pound

It’s a relatively quiet day ahead on the data front. October’s manufacturing PMI is due out later this morning.

We can expect Pound sensitivity to today’s figures, with economists forecasting a quicker pace of contraction in October.

Outside of the numbers, there is also the general election to consider and any initial polls and implications to Britain’s membership with the EU.

At the time of writing, the Pound was up by 0.11% to $1.2956.

Across the Pond

It’s another busy day ahead on the economic calendar. Key stats October nonfarm payroll and wage growth figures and October’s ISM Manufacturing PMI numbers.

While the October unemployment rate will also have an impact on the day, we would expect finalized Markit manufacturing PMI numbers to be brushed aside.

Outside of the numbers, geopolitics remains in focus. Any further chatter on trade will also influence.

The Dollar Spot Index was down by 0.15% to 97.209 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats due out following disappointing data on Thursday.

Private sector PMI numbers out of China this morning and from the U.S later today will influence crude oil prices and the Loonie.

The Loonie was up by 0.05% to C$1.3158, against the U.S Dollar, at the time of writing.

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