US jobs miss sends key markets lower – United States – English

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

Aussie leads markets lower after US jobs miss

Global shares were sent sharply lower on Friday after a big miss in US jobs sparked fears about a slowdown in the US economy.

The August non-farm employment report came in with 142k new jobs – below the 165k forecast – while the previous two months were revised down sharply. (The July report was cut from 114k to 89k while the June report was reduced from 206k to 179k.)

US sharemarkets swooned on the news with the S&P 500 down 1.7% while the Nasdaq fell 2.6%.

In FX markets, the Aussie led losses, with the AUD/USD down 1.1%, while the AUD lost ground in most other markets.

The NZD/USD lost 0.8% with the kiwi also mostly weaker across markets.

In Asia, the USD/JPY neared eight-month lows, down 0.8%.

The USD/SGD fell to new ten-year lows before rebounding 0.2% while the USD/CNH was 0.1% higher but remains near 16-month lows.

US inflation and ECB in focus this week

FX markets will be driven by key economic data releases and central bank decisions this week, with particular attention on the US consumer price index (CPI) data and European Central Bank (ECB) policy announcement.

The US CPI data for August, due on Wednesday, will provide insight into inflationary pressures in the world’s largest economy.

The ECB’s rate decision on Thursday will be closely watched as investors assess the central bank’s stance on inflation and economic growth in the Eurozone.

In Asia, China’s inflation and trade balance figures on Tuesday will be important for assessing the health of the region’s largest economy and its potential impact on regional currencies.

MYR at 18-month highs ahead of key data

The USD’s weakness has been notable across Asian FX with the USD/MYR at 18-month lows.

Looking forward, we anticipate that the unemployment rate in July will stay at 3.2%, unchanged from June, due the services sector’s growth and a solid export rebound.

We anticipate a modest increase in industrial production (IP) growth to 5.1% y-o-y in July from 5.0% in June, mostly due to increased manufactured exports, but with decreased output of petroleum products offsetting this increase. This suggests that IP growth increased sequentially from 0.7% to 2.1% m-o-m.

With trade balance dynamics about to shift as more of the manufacturing investments made since last year begin to be monetized and improve the trade balance, MYR has outperformed and has room to grow.

Aussie plunges on growth fears

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 9 – 14 September

All times AEST

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

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