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Eurozone growth slows - German data leads the way

Published: Friday 07 September 2018

  • US employment figures awaited after mixed data day
  • Canadian unemployment forecast to rise
​​By David Johnson

Thursday lacked lustre as far as foreign exchange was concerned. There were a lot of data releases and many were worse than expected. The US data is a case in point; Jobless Claims are still slowing, but the Non-Farm employment change was less positive than forecast. The composite Purchasing Managers’ Index (PMI) was weaker than forecast and so was the service sector one; and the factory orders data was pretty bad. Confusingly, the Non-Manufacturing ISM report was quite upbeat. 
I am sure there is a presidential Tweet somewhere claiming these data results are all ‘really, really good… they really are’ but that would be par for the course.  A sizable drop in crude oil inventories in the US points to potential increased demand and therefore higher energy costs. The US Dollar weakened a little on the extrapolation of all that news.
Today’s US data diary is just as fat and the forecasts are good. The unemployment rate is expected to have slipped to an astonishing 3.8% with a further circa 180,000 extra jobs having been created. If true, this data will strengthen the US Dollar.
European data equally disappointing for Euro
European data started with some poor figures. Most notably, German Industrial Production unexpectedly dropped by 1.1% in August when the markets were expecting 0.2% growth; and Germany’s trade surplus dropped from €19.3 billion last month to €15.8 billion. I am running late this morning and we have just had the Eurozone economic growth data for Q2, which confirmed the Gross Domestic Product (GDP) growth as 2.1%; a smidgeon below previous estimates. That has weakened the Euro a little and chimes with the downturn in Germany’s performance.
Canadian unemployment expected to rise
As well as all the US data, this afternoon brings the Canadian employment reports. In contrast to the US data though, we expect the unemployment rate to have risen marginally. Maybe the US President’s drive for US jobs for US workers is dragging business back from Canada, but maybe other factors are at play.
All PR is good PR, right?
And in an unashamed PR stunt, Burger King are offering someone £20,000 to be the first to try their new chicken burger. If they have to pay you to try it, is that good PR? I am not so sure.
How to upset your workmates
  • Next time you hear a helicopter or siren, scream “OH MY GOD, THEY FOUND ME”, AND RUN.
  • Play the smurf’s theme tune on loop for an hour.
  • Light candles in a pentagram around your computer before starting it.
  • Call everyone in the office ‘Beryl’ for a whole day.
  • Apologise for being late but tell them your cat died and he is in your handbag/briefcase.
  • Eat a lunch of hot tuna and garlic pasta at your desk.
  • Put a label with your name on it on everything in the fridge.
  • Use one finger on each hand and hit the keys on the keyboard like they stole your children.
  • Use everyone else’s cups and mugs and leave them dirty on your desk.
  • Wear your headphones (because you need to concentrate) and then sing all the songs from Dirty Dancing loudly and out of tune. Add some made up lyrics for extra impact.

Today's Major Economic Releases

Market BST Data/Event Previous Forecast
EUR All Day Eurogroup Meetings    
GBP 09:30 UK: Consumer Inflation Expectations 2.9% 2.9%
EUR 10:00 EU: Revised Gross Domestic Product 0.4% 0.4%
CAD 13:30 Canada: Employment Change 54.1k 54.1k
CAD 13:30 Canada: Unemployment Rate 5.8% 5.9%
USD 13:30 US: Average Hourly Earnings 0.3% 0.2%
USD 13:30 US: Non-Farm Employment Change 157k 191k
USD 13:30 US: Unemployment Rate 3.9% 3.8%
CAD 15:00 Canada: Ivey Purchasing Managers' Index 61.8 61.5

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