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Danske Bank
Today's highlight will be the US jobs report, which will give insights into whether businesses had more success hiring workers in July. The FOMC has clearly stated that job growth is a key determinant for the monetary policy outlook. Consensus is looking for an increase in non-farm payrolls by 870k, but the private sector ADP employment report earlier this week missed expectations with only 330k new jobs created during July. Labour shortages might hence still limit jobs growth despite half of US states having already phased out extraordinary unemployment benefits. In Sweden, the NDO publishes borrowing numbers for July where the reference is a projected SEK6.3bn deficit. The cumulated outcome since the last government borrowing report in May is almost bang in line with the NDO forecast.
BOE Review:
The Bank of England maintained its monetary policy unchanged in the August meeting, but struck a moderately hawkish tone by clearly signalling some monetary tightening if the economy continues recovering in line with expectations. Inflation was seen accelerating to 4% by the end of this year before stabilizing towards the 2% target next year. We expect BoE to end its quantitative easing program by the end of this year, and begin lifting rates by a first 15bp hike in H2 2022. BoE also noted that it plans to begin unwinding the QE purchases once the benchmark rate reaches 0.5%, which is currently being priced in by 2023.
Citi
USD was better bid through Asia hours ahead of today’s NFP print. Our estimate sits on the higher end of the street at +1.15m, while light USD positioning suggests risks to the currency are skewed to the topside.
Elsewhere today, AUD continues to lead high beta FX lower as Sydney’s daily cases hit a record high. The moves come despite the RBA Aug SoMP showing baseline forecasts consistent with the 'strong rebound' rhetoric as both growth and inflation seen peaking at Dec-22. Asia currencies also trended lower on frustratingly consistent virus narratives as well as generally guarded bias into the print.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.