Mixed NFP report sees stocks recover; USD lower on the day

Summary:

• US economy adds 136k new jobs in September

• Stocks extend recovery but initial USD strength fades

• Crypto newsletter: Markets take a breather

• Pound little change on the week; Brexit still dominates

The US economy added 136k new jobs in the non-farm sector in September, the number was only marginally lower than the median Bloomberg estimate at 145k. At the same time, we got a noticeable upward revision to August (to 168k from 130k), while the unemployment rate unexpectedly dropped to 3.5% from 3.7% with no change in labour participation. On the other hand, annual wage growth slowed down to 2.9% from 3.2%, bringing a wide disappointment as the consensus had pointed to no change. The initial move in the US dollar is to the upside, though US yields have barely moved. Overall, the report showed that the labour market remains still quite resilient amid a dismal performance elsewhere. 

The market reaction initially was clearly positive, seemingly more due to such a pessimistic view heading into the release rather than an impressive set of data itself. Stocks have remained well supported since the release with the US500 near its highest level of the day on the European close and higher by around 80 points from where it trade just over 24 hours ago after the second disappointing ISM release of the week. 

The first move in the buck on the data was also positive with USD gaining across the board but this has since reversed somewhat and at the time of writing the greenback is actually trading lower against most its peers on the day. This reversal has been accompanied by a similar move in bonds with an initial spike in yields not lasting. 

Our latest crypto newsletter focuses on the following and can be viewed in full here:

• Most of crypto markets have settled down this week following the last week declines

• EOS is stuck in a bullish channel

• IOTABTC keeps rising

Once again the week has been dominated by Brexit-related headlines as PM Boris Johnson has made his move and unveiled his latest plan to reach a new deal with the EU. It’s widely believed that the latest proposals won’t fly as a final solution, but it is no doubt encouraging that they have at least been received and not dismissed out of hand. The latest reports suggest the PM has a week to revise the deal and it looks like Boris will now have to turn to plan B. The pound is mixed on the week with many traders still awaiting further clarity on the Brexit situation before committing to any long-term positions.