August 3, 2018, by Lorcan Roche Kelly
The Labor Department issues jobs numbers for July at 8:30 a.m. Eastern Time this morning, with economists surveyed by Bloomberg predicting a 193,000 rise in non-farm payrolls for the month. Unemployment is seen ticking down to 3.9 percent and average hourly earnings repeating June’s 2.7 percent advance. The rate of pay increases is likely to be of most interest to economists and investors in the wake of the Federal Reserve calling the economy “ strong” for the first time since 2006.
Following the Bank of England’s rate hike yesterday, Governor Mark Carney jumped back into the Brexit debate, saying the chance of the U.K. dropping out of the European Union is “uncomfortably high.” The pound weakened below $1.30 as he spoke on BBC Radio this morning. The slip in sterling, which ended yesterday’s session lower despite the unanimous rate hike, could be a harbinger of further weakness. An options-market gauge of one-year sentiment is at the most bearish since March 2017.
Yuan to 7?
Speaking of weakening currencies, China’s yuan sank closer to 7 per dollar this morning, trading as low as 6.8965 before paring some of those losses to 6.8715 by 5:50 a.m. The currency, which hasn’t breached 7 in more than a decade, has been under pressure due to the trade standoff with the U.S. and is set for an eighth week of declines. Officials in the country are looking for monetary policy to do more to support small and medium enterprises in an effort to stave off the worst effects of the growth slowdown.
Overnight, the MSCI Asia Pacific Index slipped 0.3 percent, while Japan’s Topix index closed 0.5 percent lower as tariff threats continue to dominate the region’s markets. In Europe, the Stoxx 600 Index was 0.5 percent higher by 5:50 a.m. in a broad-based rally amid positive earnings reports. S&P 500 futures pointed to a small gain at the open ahead of payrolls numbers, the 10-year Treasury yield was at 2.979 percent and gold was flat.
A barrel of West Texas Intermediate was trading $68.96, little changed for the session, as the commodity was balanced between trade concerns and some signs of tightness in the market. In a blow to President Donald Trump’s efforts to isolate Iran, China said that it will not cut oil imports from the country, while agreeing not to ramp up purchases. Later today, investors get their weekly look at the health of the U.S. shale industry when Baker Hughes publishes its rig count at 1:00 p.m.