US non-farm payrolls exceeded expectations, but markets focused on the lift in average weekly earnings. The US dollar rose, and market pricing shifted in favour of rate hikes. Commodities were under pressure, although aluminium jumped again. Futures are pointing to further downward moves for Asia Pacific stocks ahead of a full week of macro data.
No news on trade tariffs is a marginal negative for local stock markets and currencies. Canada is standing firm in its negotiations with the US over a replacement for NAFTA, potentially staying the White House’s desire to increase pressure on China. This may see trade concerns move to the back burner this week while private discussions take place.
A 2.9% annual rate of US wage growth is a “goldilocks” result. It indicates an accelerating economy but is not yet threatening an inflation break out. Bonds sold off and yield curves steepened. This back drop could see increased focus on macro data over the week. China will report inflation, retail sales and industrial production, among other releases The ECB is expected to stand on interest rates on Thursday, but analysts will drill hard for its estimates of trade impacts. UK industrial and manufacturing data tonight could set the tone for Sterling.
The Australian dollar is threatening the US 71 cent level, potentially lending support to shares ahead of Thursday’s employment data. China CPI and PPI data may dominate today’s trading session