USD retreated for a second day in a row ahead of today’s all important job numbers from the US, which will ultimately dictate how the currency performs for the rest of the month. As USD sold off, GBP and EUR both gained on the day. On the data front UK construction PMIs disappointed, slumping to its steepest decline since May 2020 as housebuilding slumps highlight the ongoing concerns of the UK property market and economy.
* Daily move - against G10 rates at 7:30am, 06.10.23
** Indicative rates - interbank rates at 7:30am, 06.10.23
As ever on the first Friday of the month, it's all about the US jobs report today at 1.30pm. Consensus suggests a moderate slowdown from August in job additions of 170,000, with the unemployment rate expected to drop and wages to remain stable. The USD has retreated off its highs over the last days, and anything to suggest a chink in the armoury of the US economy (ie the job market is weakening more than expected) then we would expect this USD correction to continue, as markets book profits on the two month worth of gains on the currency. Consensus or better and the gains on USD are likely to continue.
Worth noting that it is Columbus day on Monday in the US, thus no USD will settle on this day. If you need to make any urgent USD transactions then please get in touch today.
We can clearly see that the US job market has been slowing gradually this year, but nonetheless remains relatively strong which supports the soft landing narrative. In light of this the USD has performed strongly over the last few months on the proviso that the economy will outperform its peers. Should the jobs market remain robust then USD seems the currency likely to benefit the most in the FX space. Anything falling short of expectations will likely cause the USD correction to continue.
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