Intraday Market Thoughts

US & Canada Jobs Previews

by Ashraf Laidi
Sep 7, 2012 12:50

UK manufacturing and industrial production rose sharply; UK producer inflation higher; German industrial production rose; Swiss unemployment rate steady. Market awaits US and Canadian labor market data. The 1.2745 that Ashraf referred to in yesterdays piece is near target. See final paragrpah for more.


Draghi induced rally continues as the common currency touches 11 week high at 1.2700. However, the greenback is holding up relatively well against the other majors, especially GBP that trades near session lows about 50 points below today's high.

UK manufacturing production bested expectations in July as it soared 3.2% erasing the 2.9% loss seen in June. Industrial production rose 2.9% from previous -2.4% which is the sharpest monthly increase since 1987. However, because of the Jubilee celebrations data has been skewed so more information is needed to form a better view.

UK PPI output prices ticked higher in August to 0.5% from 0.1% m/m and to 2.2% from 1.8%. The first increase in half a year came on the back of higher petrol and chemical prices. Input prices rose significantly over the past two months so output prices are likely to continue to rise. GBPUSD initially jumped to a recent high of 1.5984 but rising EURGBP pushed it back to 1.5930s.

In other news, German industrial production rose 1.3% in July; trade balance declined to EUR16.1 bln from previous 16.3 bln and Swiss unemployment rate was steady in August at 2.9%.

Spanish and Italian 10 year yields are declining along with the shorter term yields. Spanish 10 year fell below 6% for the first time since May and currently trades around 5.75% while the Italian equivalent fell to 5.1%.

Much awaited August NFP report is due at 8:30 am ET and it is anticipated lower at 125K from July's 163K. The unemployment rate is seen steady at 8.3%.

Canada also releases its labor market data at 8:30 am. The employment is expected to rise 9.9K after a sharp fall to -30.4K seen in July and the unemployment rate is seen unchanged at 7.3%. Ivey PMI due at 10:00 am is projected to weaken in August to 61.2 from 62.8.



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