The US Dollar has continued its strong run against both Sterling and the Euro since December. Whilst there was no key economic data yesterday, this week we have seen President Trump acquitted on both articles of impeachment. In terms of economic data both the ISM manufacturing and non-manufacturing surpassed expectations whilst the ADP employment nearly doubled the forecast numbers resulting in high expectation for today’s official labour data despite an erratic correlation between the two reports. This combination has reduced the chances of further easing.
Looking to the day ahead the market will focus on the headline data for the week in the form of the US labour data. Wednesday’s ADEP employment report will have put the market on alert for a positive number posting a reading of 291k. The general forecast to today’s Non-farm payrolls is circa 165k which will still be a solid figure if consensus is correct. The market will focus in particular to the average earnings numbers (salary inflation) as this will provide further signs of continuing growth.
Sterling Sentiment Sours After Initial Exchanges Between UK and EU Officials on Future Trade
In the meantime, Sterling remains under the cosh as sentiment surrounding Brexit has soured following initial exchanges between the UK Government and EU officials, especially after reports that the latter could target financial entities in the City of London during the next iteration of MIFID (a financial directive). In the meantime, US President Trump has expressed his anger "in livid terms" in a call with PM Boris Johnson over his decision to let Huawei into the UK’s 5G mobile network, which was reported in the Financial Times.