Daily Brief

PMIs and jobs

4 minute read

The week of trading Omicrom

For speculators who love to trade rumour and counter-rumour, it has been an entertaining few days. Friday’s Omicron story sparked a run on risky assets; on Monday the new Covid strain was said not to be dangerous; on Tuesday the Fed chairman talked of faster tapering; yesterday there was much debate about the impact of Omicron on Fed policy.

When Federal Reserve Chairman Jerome Powell (USD) made his second appearance in the Capitol, this time at the House Financial Services Committee, he expressed similar doubts. “Inflation has been more persistent and higher than we've expected” and “we can’t act as if we are sure” that it will fade next year. So not only is inflation no longer “transitory” (as he stipulated on Tuesday to the Senate), it might be persistent.

Another potentially problematic situation also emerged at yesterday’s hearing: the threat of a government shutdown (USD). For historically eccentric reasons, the US government separates public spending decisions from the means of funding them. Even though government borrowing only ever goes on one way, a “debt ceiling” limits how much it can be. Without Congressional approval, that ceiling cannot go higher, and it often suits politicians to block that approval, making it theoretically impossible to pay government salaries. The objection this time is to vaccine mandates imposed by the administration.

 

Mostly about PMIs

Wednesday’s economic data related mostly to Markit’s barometers of manufacturing sector activity around the world. Almost all the readings came in above 50, indicating growth. For the Eurozone (EUR), the index was a touch higher on the month at 58.4, with Italy registering a record high of 62.8. The common thread everywhere was rising prices. In Britain (GBP) and the United States (USD), input prices rose at a record pace. ISM’s longer-established US manufacturing PMI showed an eighteenth month of growth, with prices rising less rapidly.

Away from the PMIs, Canada (CAD) reported a 1.4% monthly rise in building permit issuance. ADP said US private sector employment (USD) went up by 534k in November, a little more than expected. The Federal Reserve’s Beige Book (USD) said “Economic activity grew at a modest to moderate pace in most Federal Reserve Districts during October and early November.” This morning’s Australian trade figures (AUD) showed the surplus narrowing in October, with exports and imports both lower on the month.

 

US jobs and services PMIs

There is something of a hiatus in the data calendar today, and there are no significant central banker appearances. Friday is a different matter, with a long list of services sector PMIs and the important monthly US employment numbers.

On today’s list, the Eurozone numbers (EUR) relate to producer prices and unemployment, neither of which are of much interest to investors. After lunch, weekly US jobless claims (USD) are of more importance, but that is all there is for the day.

Australia (AUD) sets off the barrage of services PMIs on Friday, followed by China (CNY) and Japan (JPY). The UK reading (GBP) is forecast to be half a point lower on the month at 58.6. Tomorrow morning, Eurostat (EUR) releases the retail sales figures for October. The big stuff arrives at half past one with the US and Canadian employment reports. US nonfarm payrolls (USD) are expected to have increased by 550k in November, with unemployment fractionally lower at 4.5%. Analysts reckon Canada (CAD) added 35k jobs in the same month, with unemployment falling from 6.7% to 6.6%.

 

Whatever your payment needs are, we've got you covered...

Personal payments

Personal payments

You can enjoy competitive exchange rates and low fees on all your international payments with our personal account.

Find out more
Foreign exchange business solutions

FX business solutions

We provide tailored services to help companies make global payments and manage their foreign exchange risk.

Find out more