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It is probably even good that the macroeconomic calendar is completely empty today, since two days off is clearly not enough to comprehend the contents of data that fell on the heads of investors last Friday.
Of course, everyone was only busy discussing the contents of the report of the United States Department of Labor, as if nothing else had happened. However, a mere comparison of the charts of the single European currency and the pound immediately suggests that not everything is so simple. The fact is that not only some macroeconomic data were published in the United States, but also in the Old World. At the same time, judging by the graphs, we can safely assume that these same data in the UK were clearly better than in the eurozone. And indeed it is. For the United Kingdom, only Halifax data on housing prices were published. The growth rate of which accelerated from 0.9% to 2.1%, while they forecast growth acceleration to a maximum of 1.2%. Now, given the extremely high importance of the state of the real estate market for the investment attractiveness of the UK, it is not surprising hat the pound is quite resistant to the publication of the report of the Ministry of labor of the United States.
Halifax Home Price Index (UK):
As you might guess, continental statistics were not so optimistic. The most frightening data on industrial production in Germany was published. The decline of which accelerated from -4.5% to -5.3%. However, this is the largest economy of the euro area, which has been the locomotive of the entire European Union for several decades. At the same time, the decline in industrial production has been going on for exactly a year. And except for a slight increase in October last year, then almost fifteen months in a row. Naturally, such data on industrial production in Germany can probably please Donald Trump only. But we must pay tribute to Italy, which selflessly tried to smooth out the negative regarding German statistics, by means of accelerating the growth rate of retail sales from 0.8% to 1.0%. Thus, now, we are waiting for a slowdown to 0.4%, so the Italians really pleased. However, with all due respect, Italy is not as significant as Germany, at least economically.
Industrial production growth rate (Germany):
The content of the report of the United States Department of Labor turned out to be so unexpected that absolutely all forecasts could be safely thrown away in the trash. Only the average working week was unchanged, while all other parameters showed significant changes. The most important is probably the reduction of the unemployment rate from 3.6% to 3.5%. The decline happened despite recent ADP employment data, which more likely indicated that unemployment should rise. That is, to 3.7%, as may predicted. However, everything happened completely differently. This was made possible thanks to an increase of 266 thousand in the number of new jobs created outside agriculture. It is worth noting that the creation of 175 thousand new jobs was initially forecasted. Thus, market participants were pleasantly surprised. Moreover, previous results were revised for the better, from 128 thousand to 156 thousand. So there is clearly a higher rate of job creation than could be imagined in my wildest dreams. At the same time, the joy of such good indicators turned out to be so great that it allowed me to dismiss the decrease in the share of the labor force in the total population from 63.3% to 63.2%, although this is partly what helped to reduce the unemployment rate. Even the slowdown in the growth of average hourly wages from 3.2% to 3.1% is actually not so terrible, as this happened due to a revision of the previous value from 3.0%. So to some extent, even these data can be interpreted as an improvement in the performance of the labor market.
The number of new jobs created outside agriculture (United States):
The market will smooth out imbalances and prepare for quite important events that are coming this week, given that the macroeconomic calendar is completely empty today. The decline in the single European currency last Friday was quite sharp. Therefore, we can expect a slight rebound and consolidation of the single European currency in the region of 1.1075.
The pound is driven up by expectations of the inevitability of the victory of Boris Johnson in the upcoming early parliamentary elections on Thursday. Nevertheless, investors still remain cautious and are not ready to rush headlong ahead of time, and so the pound will hang around 1.3150, periodically showing attempts to grow towards 1.3200.
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