Wage growth highs, despite the slowdown
UK jobless claims increased less than forecast at 28,200 for August, and unemployment declined to 3.8% from 3.9%, although employment growth slowed. Headline annual average earnings growth rose to 4.0% and the previous figures were revised up to 3.8%, registering a 9-year high while the Earnings excluding bonuses dipped slightly to 3.8% from 3.9%. Bank of England Governor Carney stated that despite being uneasy over global growth trends he did not see the UK employing negative interest rates.
Government spokespeople stated that “The Backstop” wouldn’t be Northern Ireland only and political tension eased due to the suspension of parliament. Sterling was unable to hold the 1.2375 mark, fading to just below 1.2350 on the Dollar and 1.1185 on the Euro. Rumours that Boris Johnson was nearer a compromise on Ireland and Brexit curbed selling interest. The Pound opens just above 1.2350 on the Dollar and near 1.1190 on the Euro domestic political rhetoric will continue to be monitored closely.
The US dollar index (98.25) stayed pretty flat yesterday over subdued risk-on appetite. The US NFIB small-business confidence index declined to 103.1 from 104.7 previously with companies less confident over the outlook, although labour-market trends remained strong. The JOLTS job-openings data recorded a decline to 7.22mn for July from 7.25mn the previous month while hires and separations both increased significantly on the month.
President Trump abruptly fired his National Security Advisor, John Bolton, yesterday afternoon. This resulted in oil prices fluctuating as markets predicted a reduced likelihood of conflict with Iran.
German Finance Minister Scholz reassured with his comments on the German 2020 budget, dampening speculation of fiscal easing. He also stated that an economic crisis could be countered by a big stimulus package which helped underpin market sentiment as underlying pressure for stimulus increased. The Euro benefitted from a slight easing of ‘nodeal’ Brexit fears, although sentiment was still fragile.
The Euro was protected by continued speculation that the ECB might avoid further government bond purchases at tomorrow’s policy meeting, although narrow ranges again prevailed given underlying uncertainty. As German bond yields moved higher, the Euro resisted selling pressure and settled around 1.1040 with marginal gains this morning.