Market Overview:
The NZD recovery may be continuing but the US Non-farm payroll data released on Friday contained mixed messages. On one hand it was softer than the 310 K+ job gain expected coming in at a 261k gain, however the previous month of September was upwardly revised to a 90K gain instead of the earlier -33K loss. Also of a positive note was a fall in the unemployment rate from 4.2% to 4.1%, a level not seen since 2000. Wage growth was lower dropping from 2.8% to 2.4% pointing to the scenario of the scenario where steady growth continues with not a lot of inflationary pressure. Enough positives for a December Fed rate hike to all but assured. ISM non-manufacturing data for October was also solid, up to 60.1 pointing to a strong start to Q4 activity. On release of the NFP report, the USD rallied against both the JPY and EUR, and US equities markets made new highs. Over the weekend there were some interesting comments from China’s Central bank Governor, warning that China’s financial system is becoming significantly more vulnerable due to high leverage and that risks were accumulating that were “hidden, complex, sudden, contagious and hazardous.” Read more