US unemployment released on Friday jumped significantly in September, stressing the resilience of the labor market, and opening the door for another Fed rate hike. Nonfarm payrolls increased by 336,000, the highest this year, unemployment rate held at 3.8% and wages rose at a moderate pace.- Two crucial economic prints are due this week – CPI on Thursday and University of Michigan sentiment Survey on Friday. CPI core inflation is expected to tick slightly higher than the Fed’s 2% target and short-term inflation expectations on the U of Michigan’s survey may have been pushed up as gasoline prices are higher.
- Minutes of the Fed’s September meeting is due on Wednesday, which should provide some guidance for the following Oct. 31- Nov.1 meeting.
- The greenback starts the week stronger across the board, with the Bloomberg Dollar Spot Index gaining 0.2%.
In the Euro-area, the highlight of the week will be the ECB’s September Monetary policy account to understand how much support is left for any additional monetary tightening. The consensus of the market is that the ECB is not likely to hike rates due to the weakness the economy.- Key economic prints in the commons area – Germany Industrial Production MoM on Monday, and Euro-area Industrial Production MoM on Friday where the latter is estimated to have rebounded slightly in August.
- The Euro is down 0.45% against the US dollar, currently trading at 1.0539 and respecting the downward trend. The Euro is also weighing 57.6% on the DYX Dollar Index movement this morning.
In The UK, Monthly GDP is expected on Thursday where a modest comeback is expected for August, after a strong contraction the previous month.- Sterling is lower this morning, breaking through 1.22 and trading at 1.2180. Next support is seen around 1.2120, 1 week low.
Oil and safe havens start the week higher after Hamas attacked Israel by surprise over the weekend. Oil jumped as supply concerns increase and safe havens like the US dollar, yen and gold gained while US and European futures fell.- Israel’s Shekel has dropped 1.6% as the conflict intensifies and the country has stated it will fight until the Hamas’s military infrastructure is dissembled, which will likely require months. The US is due to send several warships to the region.
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