Today’s Comment
As usual, the US job report to be published today is the most important economic indicator of the week and the month, and after the slightly disappointing signals from the ADP employment figures on Wednesday, today’s figure will not attract less attention.
The overall employment rate increased over the spring as more temporary workers were included in the counts, but when these were laid off at the end of June, we expect a slight decrease in the overall employment figure.
According to Bloomberg, consensus points to a drop in employment of 105,000, but if the figure disappoints, this may contribute further to the slightly pessimistic outlook on the part of investors. If, on the other hand, the employment report offers positive surprises, this may – together with the positive trends seen from Wednesday’s ISM industry index – boost the sentiment. However, on the whole, we assess that the economic indicator will have to offer a few more positive surprises before investors really become convinced that the US economy is again moving in the right direction. Therefore we still think that we may see nervousness in the markets over the coming weeks, and the fairly strong fluctuations we have seen for both equities and currencies lately indicate, all other things being equal, that investors are still quite jittery.
Quite as expected, the European Central Bank (ECB) maintained its interest rate at 1% at yesterday’s interest-rate meeting, and the ECB still intends to inject unlimited liquidity into the banks as long as necessary. The ECB still thinks that the upswing in the euro zone will continue, and Trichet emphasised at the press conference that the ECB does not see any risk of the much-discussed double dip.
However, there was not much of a reaction in the FX markets in the wake of the announcements from the ECB, and in view of the important job figures from the US this afternoon, we think we will have a fairly quiet day until 2.30 p.m.
Today’s Key Events
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09:00:00 Unemployment (NOK)
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09:15 Consumer prices (CHF)
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10:30 PMI Service (GBP)
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11:00 Retail sales (EUR)
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14:30 Employment (USD)
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16:00 ISM Service (USD)
Sunday night
- 06:00 Interest-rate announcement from the BoJ (JPY)
Today’s Chart – Change in nonfarm payrolls and unemployment (US)
