The latest Non-Farm Payrolls report, published last Friday, was shockingly bad. Estimates of 113k new jobs were quickly forgotten as the actual figure of just 12k came to light. Despite the glaring shortfall, market participants were quick to dismiss the report, claiming that successive hurricanes were to blame for the poor jobs numbers. Hard to gauge the effect of the weather on such matters, but the more one delves into the details, the worse the picture becomes. For one thing, all of the twelve thousand new jobs created emerged from the public sector; the private sector in fact lost 28k jobs. We also saw downwards revisions of 112k for previous months, which presumably had nothing to do with the recent hurricanes. To say nothing of the ADP employment numbers published two days prior, which revealed an increase of 233k jobs in October.
Positive earnings reports late in the week were enough to rise US stock indices on Friday. Despite the poor NFP data, the Dow Jones, S&P 500 and Nasdaq Composite all closed higher on the day. The Dollar also outperformed, the DXY gaining 0.4% on Friday.
As far as this week is concerned however, all bets are off. The US presidential election kicks off tomorrow, but how long it could take to confirm a result is anyone’s guess. An unclear or contested election would lead to considerable volatility across the board. The Dollar is already down 0.6% this morning in the Asian session, so it looks like currency traders will have their work cut out for them. The Federal Reserve will convene on Thursday for the next interest rate decision, currently predicted to produce another 25 bps cut according to FedWatch. On the same day, the Bank of England is also expected to lower rates on the Pound by the same margin.
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