We saw another good print for the Non Farm Payrolls on Friday night as the headline figure came out 20k better than expectations at 200k. This understandably saw the dollar appreciate across the board but what dollar bulls are most happy with, is the better than expected Earnings numbers that we got at the same time. The MoM Average Hourly Earnings came out 0.1% better but the YoY was the stand out coming in at 2.9% against the expected 2.5%, this puts the expected 3 hikes from the Fed firmly in perspective and even has some watchers looking at squeezing 4 in this year.
The US equities markets had a very bad day with the Dow Jones closing out down 2.54% closely followed by the S&P 500 at 2.12% and although the market is still well up on the year there are some trades out there that now feel we may have seen the top in the short to medium term and we are now going to see a decent retracement. Commodities also suffered on the day with Oil and Gold both off their recent highs and the US 10 year yield popped above 2.85%, all these factors should add to further dollar bullishness over the next few sessions.
It is another very busy week in the financial markets and we kick things off today with a raft of Services PMI numbers across the globe, starting in the Asian session with the Caixin Services PMI numbers out of China then various European releases into the London session before the main focus of the session on the UK numbers due at 8.30pm (exp 54.1). Into the New York session and the ISM Non Manufacturing PMI data is due at 2.00 am (exp 56.5) and this is followed by ECB President Draghi’s Annual Report to the European Parliament.
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Friday’s City: Shanghai, China