We promised a surprise in October and it seems it has taken place: despite a significant reduction in the number of people employed for the past month according to NFP (-113K), the dollar, on the contrary, increased, and the reason for this was the conflict with the dynamics of wages, and not only for this reason ...
This week the Dollar received the largest portion of statistics among other currencies, and almost all of its messages were “green”: PMI indicators rose “up”, the number of weekly applications for unemployment continues to decline, and wages do not stop to grow.
Trump's administration published a list of candidates for the post of the US Federal Reserve’s head, the re-election time of which is inexorably approaching, and Janet Yellen is present in it, which took some heat off, as previously there were rumors of Trump's dissatisfaction with the current administration of the Fed.
Markets nervously awaited the publication of the statistics of the US labor market, as amid expectations of an increase in the Fed's interest rate in December, they would like to receive confirmation of the improvement in the growth dynamics of wages ... and the markets got what they wanted, while managing to throw out of the game all those who followed NFP figures at the time of publication of the data, which in turn proved to be in significant conflict with the data on the increase in wages.
US Average Hourly Earnings (M/M) 0.5% against 0.3%
US Change in NonFarm Payrolls -33K against 80K
US Unemployment Rate SA 4.2% against 4.4%
But do not take this report seriously enough, as its data was influenced (most likely) by hurricanes sweeping through the USA, as we see a significant reduction in the employed, but at the same time we observe a reduction in the percentage unemployment (many people just could not get out to work for obvious reasons). And it really was a more positive thing rather than vice versa.
Today, futures contracts do not exclude an increase in the Fed's interest rate in December, and the probability of such an event according to the CME Group is "100%" at all.
It is rumoured that the ECB can reduce the amount of the incentive program, and at the same time extend the duration of its functioning.
In a referendum, Catalonia voted for independence from Spain, since the referendum did not pass with the approval of Madrid, and so this issue remains quite piquant and sharp for EUR.
Published a number of mixed statistics of leading indicators from PMI:
Manufacturing PMI declined to 55.9 against 56.7
Construction PMI fell behind the critical 50 and made 48.1
Services PMI remained at its own, in fact, 53.6 against the previous value of 53.2
It should be recalled that Mark Carney (Bank of England) promises to raise the interest rate in the near future. This message has already been won, and the pound is likely to remain under pressure due to the absence of any other news.
Expectedly, the Reserve Bank of England kept the interest rate at 1.5%, and the market continues to believe that there will be any changes at the RBA meeting only next year, presumably in the summer.
The minutes of the RBA meeting remained almost unchanged, but some moments evolved: the description of the global economic environment was replaced from “are continuing to improve” to “have improved”. The bank also noted a continued strong growth of the labor market, but at the same time, inflation remains weak (with the prospect of growth to the target level).
However, investors did not find any hint of a future increase in the interest rate that could support the Australian in a pair of AUDUSD, which, amid the strengthening of the US dollar, continued to decline after the publication of the minutes.
On Thursday, weak Australian retail sales data were published: -0.6% against the expected 0.3%, which in no way helped strengthen the Aussie exchange rate. Another driver for the fall in the AUDUSD exchange rate was an interview with Ian Harper, member of the RBA board, who expressed concern about the weakness of consumer spending dynamics.
Pay attention next week
The next week will be quite boring in terms of news trading since the number of edible trading indicators is quite small, and October (even though it already gave us several trading signals) will open in the third or fourth week, when also a number of additional quarterly reports will be published.
Nevertheless, the pressure on GBPUSD gives us reason to pay attention to the data of the British production on Tuesday, and on Friday pay attention to retail sales from the USA (unfortunately, the US consumer price index will be published at the same time).
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