EUR / USD, GBP / USD
The main expectation for Friday which was the number of new jobs outside the US agricultural sector (Change in Nonfarm Payrolls) did not meet expectations. The released data from the Ministry of Labor reported only 156 thousand new jobs in August against the expectation of 180 thousand. Meanwhile, the previous indicator was revised to decrease from 209 thousand to 189 thousand. The share of economically active population remained at 62.9%. However, unemployment rose to 4.4% from 4.3%. Weak expectations were set regarding the growth of wages by 0.1% versus 0.2%. With the released news, the euro jumped by 64 points. However, the day's closing ended with a decrease of 49 points, and on even larger volumes. We have no doubt that the growth was due to middle-class players. It was suppressed by massive sales of large investors. At the same time, Bloomberg published material on the slowing process of monetary policy revision inside the ECB, which covered this major game. The situation that has taken place strengthened the dollar even more in the opinion that the currency's turn will be retained.
In the US, there were also progressive news. Business activity in the manufacturing sector from Markit showed 52.8 points in the final evaluation for August against 52.5 earlier. ISM Manufacturing PMI jumped from 56.3 to 58.8. The costs for construction were worse (in July -0.6%) and consumer confidence was not better as well (96.8 vs 97.6). Yields on US government bonds increased across the spectrum, showing a positive assessment by investors of the released US data.
In the UK, Manufacturing PMI grew from 55.3 to 56.9 and the pound closed the day with an increase of 18 points. The final estimate of the Manufacturing PMI for the eurozone remained unchanged at 57.4 points.
On Sunday, the authorities of the DPRK announced the testing of a hydrogen bomb. This morning, the main currency pairs opened with a slight weakening, but we accept this market reaction as a psychological reflex. Traditionally, with the intensity of the geopolitical situation, the dollar strengthens.
Today is a holiday in the US. In the UK, the index of business activity in the construction sector for the month of August is projected to grow from 51.9 to 52.1. The index of investor confidence in the eurozone Sentix for the month of September is expected to decrease from 27.7 to 27.4. The producer price index in July is expected to grow by 0.1%.
We are waiting for the euro at 1.1660 and the pound sterling in the range of 1.2735 / 55.
USD / JPY
Last Friday, Japan got weak data. However, the strengthening of the dollar on employment data in the US did their job. The yen added 27 points. So, the volume of capital investments in the second quarter added only 1.5% y / y against expectations of 8.3% y / y and 4.5% y / y in the 1st quarter. Business activity in the manufacturing sector for the month of August fell from 52.8 to 52.2. The index of household confidence declined from 43.8 to 43.3. After the release of employment data in the US, the average weighted expected federal funds rate for December rose from 1,200% to 1,205%. And this turned out to be sufficient for the yield on the 5-year US government bonds to increase from 1.702% to 1.740%. The growth of the stock index, S&P 500, was at 0.20%. Friday's growth in the Nikkei 225 was 0.23%.
The test of a hydrogen bomb by North Korea spoiled a good initiative. Japan called the tests "absolutely inexcusable", but, as in the case of the previous test, the yen strengthened to increase the demand of the traditional protective tool. In the future, the yen is unlikely to retain such a status since Japan is near a hotbed of global tension. Further deterioration of the situation will weaken the national Japanese currency. We are waiting for the yen at 111.00.
