America's economy generated some good numbers on Friday. The manufacturing sector purchasing managers' index readings from Markit and the ISM both exceeded expectations at 54.9 and 56.6, the ISM figure coming more than two points higher on the month. There was better news too from the University of Michigan: its index of consumer sentiment was half a point higher on the month at 91.2.
The headline item in the Department of Labor's employment report showed an increase of 304k in nonfarm payrolls last month, almost twice as many new jobs as forecast. Although there was a large downward revision to the December figure, the net result was 69k more people in work than analysts had forecast. There was significant volatility for the USD in the aftermath of the data' release but by lunchtime investors had agreed to take the currency higher.
With the Euroland inflation data out of the way on Friday, the EUR wandered aimlessly into the weekend. It showed hardly any greater sense of purpose in Europe this morning and it was a net 0.2% lower against the USD. In a modest crop of euro zone ecostats the Sentix index of investor confidence lost two points on the month scoring a -3.7, Italian inflation slowed to 0.9% and producer prices logged an annual increase of 3.0%.
The recent data have not been helpful to the EUR and it is likely that the European Commission will downgrade its forecast for the Euroland economy on Thursday. Back in November the EC is looking for 1.9% gross domestic product growth in 2019: the consensus among economists today is 1.4%. But there will not be a recession, at least according to ECB Governing Council member Ewald Nowotny. He said this morning in Budapest "I expect that we'll be able to overcome these negative influences… there is no perspective of a recession."
Paradoxically, the strong US data did more for the Loonie than they did for the USD. The Canadian currency is 0.4% higher against the USD despite a decline in Canada manufacturing PMI from 53.6 to 53.0.
The CAD's upward progress came as a result of higher oil prices. The strong US payroll numbers led to an almost immediate 50-cent jump in the price of WTI crude and it added a further dollar and a half before the end of the day. It was not a huge move but the 3.8% increase was enough to fire up the CAD.
After struggling during the early London session on Friday, the GBP had resumed an even keel by the time New York opened. It remained within a half-cent range for the following 24 hours, eventually losing an insignificant 0.1% to the USD.
The only UK statistic this morning was less than friendly: the construction sector PMI was more than two points lower on the month, at 50.6. But it was not that statistic that weighed on the GBP during the early London session, it was the news that Nissan had scrapped plans to build its new X-Trail SUV in Britain. The change of direction is said to result from the new EU-Japan trade agreement and a cooling appetite for diesel vehicles, but investors inevitably linked it to Brexit and some commentators saw it as the beginning of the end for Britain's auto manufacturers.
The yen was completely out of the running on Friday and it looked no more comfortable in London this morning. Compared with Friday, the JPY is down by 0.9% against the USD.
There were no Japanese economic data to affect it. News that Japan's money supply increased by 4.7% in the year to January was of no consequence. The yen's real problem was the punchy US ecostats, especially the manufacturing PMIs and consumer confidence. They dealt a visible blow to the JPY. Reassured that America's economy was in better shape than some had feared, investors felt no need for the safety of the JPY.