Yesterday, solid US non-manufacturing ISM supported growing risk appetite alongside easing U.S. China trade tensions. Global bond
markets are correcting, equity markets are higher and safe-haven currencies in USD, JPY and CHF are weaker. SNB Chairman Thomas Jordan
indicted that interest rates must stay negative and how critical interest rates spread are to the pricing of currencies. We would not dig too
deep into this risk rally ahead of fluid Brexit situation and US labor report. The market is looking for non-farm payrolls to have added 165k
jobs in August. If correct, this read would be slightly above the 3-month average. In other parts of the report, the unemployment rate steady
at 3.7% and wages up another 0.3%, which would drive the annual wage growth rate lower from 3.2% to 3.1%. Should the data come inline it would
indicate the job market is healthy, with strong gain in jobs and acceleration in wage growth. Potentially, weakness in consumer confidence
might be unfounded, despite rising threats from trade tensions and general fears of a recession. In other events, Fed Chair Powell will be
monitored for any hints ahead of a critical fed decision later this month. Growing expectations for the ECB next week to take an expansionary
stance will keep EURUSD weak.
By Peter Rosenstreich
