US stocks, the US$ and bond yields all finished Friday lower after the US jobs data came in weaker than expected in hinting at an economic slowdown that may support expectations of fewer interest rate increases from the Federal Reserve in 2019 than had previously been expected. The NFP showed only 155k growth in November, well below expectation of 200k while the previous month’s figure was also revised down from 250k to 237k. The headline unemployment rate, though, was unchanged at 3.7% in line with expectation but average hourly earnings rose only by 0.2% mm, missing expectation of 0.3% mm.
Stocks ended sharply down, by around 2.5%-3.0%, while the dollar was lower against the EU majors but managed to make minor gains against the commodity currencies, which were hurt by increased US/China tensions and also by the prospect of slower global economic growth.
WTI was volatile again but ended the day up by 1.8%, albeit well off its highs, after OPEC and non-member allies led managed to agree to a production cut of 1.2 million barrels per day.
The big winners on Friday were the metals, which saw Gold up by around 1%, (Silver +1.5%, Copper +0.5%) largely in a reaction to lower expectations for rate hikes in 2019.
Note that the China inflation data for November was out over the weekend, coming in at 2.2%, vs expectation of 2.4%, and down from 2.5% in October. This has seen the Aud$ open lower on Monday, at 0.7180, in early inter-bank trade.
Looking ahead, it will be a busy week although much of the price action seems destined to be on the back of US/China trade related headlines. In Economic terms, the focus is likely to be on Thursday when both the ECB and the SNB have interest rate decisions to make (no changes expected to policy so the statements will be the key focal point). Monday kicks off with a speech from the RBA Asst Gov. Kent and the Australian Home Loans data, which looks set to disappoint given the recent headlines and downturn in prices and may drag the Aud$ lower with it. The UK will be busy to with the Manufacturing/Industrial Production and the monthly GDP figures due, but otherwise Monday will be a thin calendar.
Other highlights during the week will include the UK Jobs data, ZEW US PPI (Tue), WBC Australian Consumer Confidence, US CPI (Wed), Australian Consumer Inflation Expectation, RBA Bulletin, German CPI/HICP (Thur), Japan Tankan, China Retail Sales, Industrial Production, Fixed Asset Investment, EU Markit Flash Manufacturing/Services /Composite PMIs, US Retail Sales (Fri). Have a good week.
Economic data highlights will include:
Mon: RBA Asst Gov. Kent Speech, Australian Home October Loans/Investment Lending for Homes data, NZ Q3 Mfg Sales, Japan Q3 GDP, Eco Watchers Survey , German Trade Balance, ECJ ruling on Brexit Article 50, EU Sentix Investor Confidence Survey, UK Manufacturing/Industrial Production, Trade Balance, Oct GDP, NIESR GDP Estimate, US JOLTS
Tue: NZ Electronic Card Retail Sales, Monthly Inflation Gauge, Australian House Price Index, NAB Business Conditions/Confidence, China New Loans, UK Unemployment , German/EU ZEW Economic Sentiment Survey, US PPI,
Wed: WBC Australian Consumer Confidence , Japan Machine Orders, Domestic Corporate Goods Orders Index, Tertiary Industry Index, China Foreign Direct Investment, EU Industrial Production, US CPI, Monthly Budget Statement, EIA Crude Oil Stocks Weekly Change
Thur: NZ Food Price Index, Australian Consumer Inflation Expectation, RBA Bulletin, German CPI/HICP, SNB Interest Rate Decision/Statement, ECB Interest Rate Decision/Statement/ Press Conference, US Import/Export Index,
Fri: Japan Tankan, Industrial Production, Capacity Utilisation, China Retail Sales, Industrial Production, Fixed Asset Investment, EU Markit Flash Manufacturing/Services/Composite PMIs, US Retail Sales, Industrial Production, Capacity Utilisation, Business Inventories.
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