Good morning,

USD: Hurricane season still stubbornly clouding data

While adding 261,000 jobs over the course October is no mean feat, it still fell slightly short of expectations. This, twinned with slower than expected wage growth, has tilted today’s labor market report towards being a disappointment. However, the revisions to both September and August’s figures were positive, meaning there was fall in job openings in September as was previously feared.

Nonetheless, the data was noisy. The far-reaching effects of the early September hurricane season continued to add to the volatility of today’s figure, making the interpretation and analysis of the current condition of the labor market even trickier. As a result, the market’s taken the release in its stride, with the dollar relatively unmoved against the euro and sterling post-payrolls.

North of the border, the Loonie’s bouncing back after a tough few sessions as Canada added over twice as many jobs as economists had forecast, with a +35,000 change to net employment. USD/CAD’s now well below 1.28 for the first time in over a week.

GBP: Aftermath

The aftermath of the Bank of England’s first interest rate rise in 10 years has been muted with sterling remaining lower as investors focus more on the negative and dovish language the Bank employed on Brexit and the state of the UK economy. On Sunday Governor Carney said that the Bank might not be able to cut interest rates if inflation pressures are too great should the UK’s deal with the EU turn out to be worse than expected.

This morning’s Times reports that the EU has started to draw up the outlines of a future trade deal with the UK after Theresa May signalled that Britain is willing to pay more than EUR 60 billion as a ‘Brexit bill’. An agreement to talk about trade pre-Christmas could support the pound into the beginning of 2018.

AUD: RBA to decide on rates

Unlike the Bank of England we do not foresee the Reserve Bank of Australia hiking interest rates overnight tonight. Interest rates should stay at 1.5% with our expectation that they will remain at that level for another year or so. We will receive updated forecasts as well of the Australian economy that should show that both the outlook for inflation and growth have both softened.

AUD remains soft following the resignation of the Deputy PM after it emerged that he was not an Australian citizen.

The Day Ahead

Today’s data calendar is rather light. Donald Trump is in Asia on a trade tour and so far is asking Japanese manufacturers to play fair in the global export space. His tour shifts to South Korea tomorrow before 2 days in China, 2 in Vietnam and finishing up with 2 in the Philippines. I’m sure there will be many headlines to keep us amused/terrified as the tour goes on.

Have a great day.