US jobs report provides shock surprise to the upside as dollar gains 1.4%, BoE’s Pill confident inflation to fall this year.
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February 6, 2023
Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.
GBP/USD 1.2064 GBP/EUR 1.1181 EUR/USD 1.0790 USD/CAD 1.3405 EUR/CHF 0.9972 EUR/SEK 11.4229 EUR/NOK 11.0547 EUR/DKK 7.4450 USD/ILS 3.4396 AUD/USD 0.6928 NZD/USD 0.6323 USD/SGD 1.3233 USD/JPY 131.86 USD/CNH 6.7833 USD/INR 82.6325 EUR/ILS 3.7113 GBP/ILS 4.1496 USD/ZAR 17.4982
GBPUSD fell nearly 0.8% on Friday following stronger than expected US data. The pair has regained some traction during the early session, however, remains subdued around the 1.2060 level at time of writing. The FTSE has opened on a sharp decline, losing 0.5% this morning as increasing US/China tensions dampens sentiment.
BoE Chief Economist Huw Pill stated on Friday that he is confident inflation will fall this year following their consistent rate hike program in the UK. Chatter surrounding MPC members continues to be dovish, highlighting an increasing divergence between the BoE and ECB. MPC member Mann is due to speak today, which will be a key focus for markets.
The UK services sector comes under further pressure today, as the biggest round of NHS strikes begin. One third of nurses and ambulance staff are expected to strike today.EUR
The euro tumbled against the Dollar on Friday, losing over 1% as US non-farm payroll figures shocked markets with an impressive print. After reaching 10-month highs last week, EURUSD seems to have entered into a consolidation phase, trading below 1.0700 at time of writing. German factory orders climbed 3.2%, beating 2% forecasts, although unable to buoy the single currency.
Several ECB policymakers, echoed recent hawkish sentiment on Friday, citing that March’s rate hike, which has already been confirmed by Christine Lagarde, is unlikely to be the last and a 25-50bps hike could be possible in May. Retail Sales for the Euro area and a speech from ECB President Lagarde will be the key focus for markets today.USD
The January jobs report provided a shock surprise to the upside. Job growth was extremely robust surpassing the 180,000 estimates at 517,000. Consequently, the unemployment rate pushed slightly lower to 3.4% from 3.5% prior. It is unlikely that this reading will alter the Fed’s policy plans considerably, as they will wait for more reliable signals from the employment cost index. Estimates see the underlying pace of wage growth remaining above 4%, substantially higher than the Fed’s price target.
The dollar jumped higher following last week’s jobs report, with the DXY now trading 1.4% higher, as markets accounted for wage growth remaining higher for longer.
The US military has shot down a giant Chinese balloon which they allege has been spying on key military sites across the US. Beijing has insisted that the balloon is a weather ship, which has been blown astray.ASIA/PACIFIC
Indonesian growth didn’t drop below trend; however, it has slowed enough to potentially dissuade the central bank from raising interest rates further this month. Whether this ends its tightening cycle will depend on the rupiah’s stability.
The border between Hong Kong and mainland China fully reopened today as daily quotas and testing requirements were dropped. Meanwhile, the mass trial of Hong Kong pro-democracy figures began today with 50 defendants set to go on trial.ILS
Jacob Frenkel, a former Bank of Israel chief warned of the negative impact of the coalition’s judicial overhaul. He compared the situation to Poland, where the nations credit rating dropped, prices rose, and its capacity to borrow was weakened. Off the back of the US jobs report, USDILS trades near 3.44.Data & Events
Euro-Area Retail Sales
UK NHS strikes
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