- Jobless claims spark concerns for tomorrow’s unemployment rate release
- Manufacturing PMI shows big slumps in business conditions
- Construction spending stagnant
- Implications for non-farm payrolls tomorrow
- FED hike in September could be off the cards
GBPUSD hits 1 month high following poor US data
It has been a very interesting day on the markets, this morning’s UK manufacturing PMI release rebounded from its post-Brexit losses whilst the US release took a turn for the worse. The ISM manufacturing PMI measures business conditions in the manufacturing sector, which is vital to the US economy.
The good news however came from the labor costs release which showed significant improvements. This is important to the US economy given Yellen’s stance on real wage growth. Labor costs measure the costs of employing a labor force and are usually indicative of better wages and higher inflation.
The construction spending release is a good indicator for predicting future housing builds. Construction spending has not improved since the previous release which demonstrates a slowing housing market.
What implications could today’s release have on tomorrow’s Nonfarm payrolls and FED interest rate hike?
A weaker manufacturing sector, higher jobless claims and slower construction spending could all contribute to less jobs being created in the US.
If the non-farm figures tomorrow provide a positive outlook this could open the door to a FED hike in September. However, I remain sceptical that tomorrow’s release will meet expectations.
A poor result tomorrow could see GBPUSD move closer to the mid 1.33, investors are waiting with anticipation for tomorrow’s release as it’s likely to be a strong indicator for a FED hike. Some would have already priced in a hike for September and a negative result tomorrow could see funds move away from the US Dollar.
If you are buying US Dollars in the near future, be aware that if tomorrow’s result is positive, a FED interest rate hike could be on the horizon. This could have significant implications for GBPUSD exchange rates.