A combination of a strong Non-Farm Payroll print and a touch of market uncertainty combined on Friday night to lead to a weak finish to the week for the US equity markets. The NFP number came out much stronger than expected at 250k and this led to a rally in the greenback and a fall in treasuries with the US 10 year yields pushing up to 3.21% again. The stock markets came under pressure with the Nasdaq finishing the day in excess of 1% down and the futures pricing in a negative start to most Asian indices. The pound gapped on the open today after more positive news on the Brexit front came through over the weekend, reports that the UK had secured concessions from the EU on the hard border issue in Northern Ireland saw the cable open 50 pips higher.
Investors are also concerned that despite a change in tone from the US side, there is still a lot of work to be done in the ongoing trade situation with China. With the mid term elections front of mind for the US administration this week, market participants are aware that a strong market leading into the voting could be crucial and are wary that last week’s positive tone towards China with regard to trade, could be short lived.
It should be another interesting week ahead for financial markets, the US midterms will be major focus but there is also plenty of tier 1 economic data due for release as well as some major central bank announcements including the FOMC. Geo-Political issues look set to continue to influence market sentiment as well with Brexit already leading the charge on today’s FX open. The Asian session is quiet today in terms of fundamental economic data releases but the latest Services PMI numbers in the UK will be a focus as we move into the London trading day. Bank of Canada Governor Poloz is due to speak in London later in the day and then traders in the US will be looking for any significant change in the latest ISM Non-Manufacturing PMI number, with market expectation sitting at 59.3.