Post NFP
While the NFP came below the market towering expectations, but with a +90k revision to Aug-Sept jobs, the data implies the hurricane influence was bad, but not as had been reported, so this months print was less influential
However, wage growth came in dismally low, but with the hurricane’s distorting effects thought to be skewing the data, there should be no muss or any fuss from the Fed. And while the" inflationista’s" on the FOMC will fret but given the booming US economy, the Fed is pushing forward with December rate hike despite the skinny paychecks expecting an eventual bounce on wages due to the strength in the other payroll headlines.
After the USD knee-jerk, astute traders bought dollar on the dip, and ISM non-manufacturing confirmed that fading the primary post-NFP USD weakness was the correct call. The index has come in at 60.1 for October vs 58.5 expected and all but greenlighted a wave USD buying into the weekend.
Jay Powell
Munchin got his man convincing Trump that continuity and stability at the Fed helm were essential and Jay Powell appointment suggests just that. The presumption is he will not deviate too far from current Fed policy trajectory while supporting Trump’s self-proclaimed stance of being a " low-interest rate person."
Tax Reform -Trump – Asia
While a relatively light US economic diary next week, there will be no lack of political bluster as the tax reform debate rages on while Trump will be dealing with North Korea nuclear ambitions and regional trade wars during his Asia tour. In a show of US military might, an entourage of F-35’s will accompany Trump( actually deployed to Okinawa), and the mainstay of the US Navy’s power projection, two more Aircraft Carriers will be positioned in the Western Pacific bringing the unprecedented regional total to three.
Danger Downunder
Next week both the RBA and RBNZ policy meeting take centre stage
The Aud remains vulnerable to RBA dovish guidance even more so post a dismal nationwide plummet in retails sales. The market should continue sour on Aussie trade.
The NZD is a bit more complicated given extended short positions established on local political noise suggesting these trades are incredibly vulnerable to a more hawkish RBNZ bias than the market is forecasting.
The market has been selling Kiwi the better part of two weeks and my start to unwind shorts ahead of the RBNZ
