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GBP AUD CAD all benefit following NFP misses

Market Analysis

GBPUSD, H1                   

For the U.S. jobs data impact on other August reports, we expect a 0.3% personal income rise after a 0.4% July rise. We saw average gains of just 0.2% in Q2, a sturdy 0.6% in Q1 but 0.0% in Q4, as taxpayers push income into the 2017 tax year from Q4. We expect Q3 growth of 3.3% for total and 2.9% for disposable income, following respective rates of 3.0% and 3.5% in Q2. Industrial production is poised for a 0.6% August drop, with hits from factories and mining given hours-worked drops of 0.2% for factories and 0.1% for mining. The headline decline mostly reflects a 4.5% utility output drop after an 11.4% five-month rise through July. We assume a 4% vehicle assembly bounce to a 10.7 mln rate. We expect a Q3 growth rate for industrial production of 0.6%, after rates of 5.2% in Q2, 1.6% in Q1, 0.7% in Q4, 0.8% in Q3, and declines in five of the six quarters before that.

U.S. ISM manufacturing index rose 2.5 points to 58.8 in August, much better than expected, after dipping 1.5 points to 56.3 in July. It was at 49.4 a year ago and it makes a new range high for 2017 (the 54.8 in April is the low). In fact, this is the highest print since April 2011. The employment component jumped to 59.9 from 55.2 and is the highest since mid-2011. New orders dipped to 60.3 from 60.4. New export orders dropped to 55.5 from 57.5. Prices paid were steady at 62.0. the ISM data helps USD pull back some loses from the NFP misses. Still to come before the Labor Day holiday weekend the weekly USOil rig count and COT reports from the CFTC.


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Stuart Cowell

Senior Market Analyst


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