Good morning,

USD – Jobs data to momentarily distract from trade noise

It is Non-Farm payrolls day in the United States but the jobs market is being overshadowed by trade concerns as we close out the week’s trade. Analysts and economists are looking for the US economy to have added 191,000 jobs in August, with wages expected to have risen 2.7% since last year. This is solid but not spectacular growth and would mimick similar releases from the US that we have seen in the past weeks. The US economy is doing just fine, and any dip in the jobs numbers will only lead to suggestions that the US economy has finally reached full employment.

On trade, President Trump said on Thursday that he believes Canada will end up being part of a new NAFTA agreement. News reports this morning are suggesting that talks between the US and Canada have seemed upbeat, but are not expected to lead to a deal this week.

China got out ahead of the US yesterday by announcing its intention to retaliate to any new tariff demands from the White House. So far we have heard nothing on the rumoured $200bn of tariffs that were due to be announced before the end of this week.

We expect most dollar pairs to remain quiet this AM in the run-in to the payrolls announcement at 1.30 and, after that, it is anyone’s guess.

GBP – Sunday remains an important day

There was no Brexit news to speak of yesterday which was interesting in itself. Entering the weekend we have to be wary of the pound’s reaction to political posturing in the papers and on the Sunday morning chat shows.

There is no sterling data today and despite the back and forth of Brexit headlines that we have had this week, we are firmly entrenched in the well-worn ranges in both GBPEUR and GBPUSD and a breakout to either the high or lowside looks unlikely before the weekend.

Overnight, Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker showed like-for-like sales dropped 2.7% in August from a year earlier. Higher inflation and poor wage growth are keeping shoppers from purchasing goods over food and the summer heatwave was great for bars and restaurants but not so much for other retailers.

AUD – Right in the crosshairs

Despite a better than expected housing approvals number, the AUD has come in for another negative night. AUD is caught in the crosshairs of being closely tied to China, reliant on external financing, subject to vacillations in commodity markets and having an economy that is slowing.

We are looking for another 2% to come out of the AUD at least as it tests the 0.70 level against the USD and the 1.84 level against the pound.

Jeremy Thomson-Cook, Chief Economist