Summary:
- NFP misses forecasts but prior revised higher; Gold bounces from support
- ISM disappoints but stocks remain near weekly highs
- PBOC raise reserve requirement
- UBS doubts Bitcoin credentials for payments
- Services sector disappointment does little for GBP
The US jobs report for July has come in a little softer than expected, but the edge was taken off the bad news due to some favourable revisions to the previous release. Let’s look at the numbers now in more detail. The headline non-farm employment change fell to 157k from 248k previously, with this prior reading being revised higher from 213k originally. Against the expected 191k, this print does seem low, but once the revision is taken into account it is actually pretty much inline.
The final data release of the week has shown another lower than expected reading for the US with the ISM non-manufacturing PMI missing forecasts. A print of 55.7 was well below the 58.6 consensus forecast and marks a substantial decline from the 59.1 seen last time out. The reading is the lowest since August last year and while it is still a long way above the 50 level, it is clearly a disappointment. Despite this US indices remain fairly well supported with the US500 and US100 near their highest levels of the week on the European cash close.
The US dollar slumped across the board following the news that the Chinese central bank would increase a reserve requirement for trading foreign currency forwards to 20% from 0%. The move is aimed at helping the China’s currency erase some of its losses, and may also help equity markets. Despite this and the aforementioned soft data, the USD remains fairly mixed on the day.
Crypto markets are little changed on the day but its not been a great week for bulls with the markets handing back prior gains. UBS, a Switzerland-based investment bank, voiced its opinion about Bitcoin. According to the UBS strategists’ publication, Bitcoin is too volatile (due to fixed supply and unusual demand dynamics) to function as a money or a viable new asset class. However, the Swiss bank does not exclude that Bitcoin could fulfill this role in the future
The pound was bruised on Thursday despite the interest rate hike delivered by the Bank of England as well as the widespread strength of the US dollar. After taking in a double whammy yesterday the British currency was hit again on Friday following the unexpectedly substantial decrease in services PMI. The data along with downbeat remarks coming from Mark Carney pushed the GBP down below 1.30 against the greenback.
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