Daily Brief

Tightening mood

Jobs gap

The North American employment data and the Bank of England all raised eyebrows at the end of last week. For currencies, the upshot was a third win in five days for the Norwegian krone (NOK) and a fourth wooden spoon for the Japanese yen in the same period. Sterling was on average unchanged.

At a global level the main story was the US employment report (USD). It was undoubtedly disappointing, but the degree of that disappointment depended on the closeness of the scrutiny. On the face of it, the 194k increase in nonfarm payrolls was well adrift from the forecast 500k rise. However, it did not look so miserable in the light of upward revisions to the previous two months. They produced a net increase of 371k, which brought the rate of unemployment down to 4.8%. Importantly, the payrolls miss does not look big enough to deter the Federal Reserve (USD) from beginning to wind down – “taper” - the pace of its asset purchases next month.

North of the border, the Canadian Labour Force Survey (CAD) was altogether more satisfying. Employment increased by 157k in September, returning to the pre-pandemic level of February 2020. Because the US (USD) and Canadian (CAD) data appeared simultaneously, the difference in their reception was immediately clear, with the Loonie strengthening by two thirds of a US cent.


Old Lady talks tough

Two senior Bank of England (GBP) officials gave the impression at the weekend that they are ready to tighten monetary policy in response to rising inflation. Their comments did not come as a surprise, as investors had already begun to price in a rate increase before the end of the year.

Monetary Policy Committee member Michael Saunders endorsed that market action, telling the Daily Telegraph; “I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously”, Governor Andrew Bailey said in the Yorkshire Post “obviously I am concerned with inflation above target”. The prime minister’s encouragement of employers to pay higher wages can only add to inflationary pressures.

The Bank of England’s Quarterly Bulletin (GBP) did not add anything to the monetary policy debate. Its main topic was the impact on the UK economy of events abroad.



Today, parts of the United States mark Columbus Day (USD) and Canada gets the day off for Thanksgiving (CAD). For good measure, tomorrow is National Day in Spain. Economic data are few and far between today but start to look interesting on Tuesday.

The only firm agenda items today are Norwegian inflation (NOK), which came in at 4.1% and Japanese machine tool orders (JPY), which increased by 71.9% between September 2020 and September 2021. At some point the NIESR will give its estimate of third quarter UK gross domestic product (GBP).

Tonight the British Retail Consortium reports on retail sales in September (GBP), NAD prints its measure of Australian business confidence and HIA reveals Australian new home sales for September (AUD). At 07:00 on Tuesday morning the ONS employment data (GBP) will appear.


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