US stimulus and jobs

The US dollar and Japanese yen were the biggest losers on Friday, both giving up an average of 0.4% to the major currencies. The dollar’s problem was the US employment report; the yen suffered collateral damage. Out in front, the Northern Scandinavian crowns led the way while sterling pottered around in the back half of the field for an average loss of 0.2%.

In the States, the two big stories were the Democrats’ stimulus package and January’s nonfarm payrolls. The Senate approved a budget resolution paving the way for President Joe Biden’s $1.9 trillion pandemic relief package. It went through on party lines, 50-50, with the casting vote of Vice President Kamala Harris deciding the matter. However, the package is not without detractors, even within the Democratic Party. One-time Treasury Secretary Larry Summers warned of inflationary pressures, a point conceded by the incumbent Janet Yellen. She believes, however, that policy makers have the tools to deal with that problem, should it arise.

At first glance, Friday’s US employment report looked alright. Nonfarm payrolls increased by 49k, roughly in line with consensus, and unemployment fell from 6.4% to 6.3%. However, some analysts had predicted an increase of 100k or more for payrolls. Disappointment on that count was compounded by downward revisions of more than 150k to previous months.

Canadian jobs

The Canadian employment data, which appeared at the same time as the US numbers, were no more inspiring. However, investors were more concerned with the US report and the Canadian result was offset, to an extent, by a smaller than expected trade deficit and a further rise in oil prices.

Canada’s employment report showed employment falling and unemployment rising to 9.4%, the highest rate since last summer. Employment was down by 858k compared with the pre-pandemic level in February 2020. The trade figures looked rather better, with exports rising 1.5% and imports falling 2.3% in December. The Loonie was barely changed on average and against sterling. It added a third of a US cent.

Bank of England Governor Andrew Bailey was interviewed by The Observer newspaper on Sunday. He predicts a spending spree when lockdown restrictions are lifted but he does not expect households to blow all of the £125 billion in extra savings that they have accrued since the start of the pandemic; some 95% of it is likely to go towards paying down mortgages and other debt.

UK retail sales

As far as ecostats are concerned, today is a bit of a washout. There is nothing from North America and the only UK statistic is tonight’s retail sales measure from the British Retail Consortium.

Figures already released put Swiss unemployment at 3.5%. In the last nine months it has remained between 3.3% and 3.5%. German industrial production was unchanged in December and down by 1% from the same month in 2019.

This morning Sentix prints its measure of Eurozone investor confidence. Tonight NAB reports on Australian business conditions and the Reserve Bank of New Zealand reveals NZ inflation expectations.