United States of America

USD is strengthening against EUR, JPY, and GBP.

Investors are focusing on September labor market data. Nonfarm payrolls increased from 159.0K to 254.0K, exceeding the forecast of 147.0K, and the unemployment rate fell from 4.2% to 4.1%. Average hourly earnings added 0.4% MoM compared to estimates of 0.3% and 4.0% YoY against 3.8%. Against the sector’s stability, the need for significant easing of the US Fed’s monetary policy is decreasing. Most likely, before the end of the year, regulator officials will adjust the interest rate twice, in November and December, by a total of –50 basis points, and not –75 basis points, as experts had previously expected.

Eurozone

EUR is weakening against USD and GBP but strengthening against JPY.

Today, the European Central Bank (ECB) Governing Board member Mario Centeno said that the labor market is cooling significantly, which could lead to a decline in investment and slow economic growth to below-normal rates. According to the official, the number of vacancies has fallen by 20.0% compared to two years ago, and the number of new jobs is 10.0% below the high recorded in the second quarter of 2022. At the same time, he acknowledged that inflation in the region was under control and the regulator would make every effort to keep it at the target level of 2.0%.

United Kingdom

GBP is weakening against USD but strengthening against EUR and JPY.

Today, the Bank of England’s chief economist, Hugh Pill, said that the regulator should cut interest rates gradually since the risks of a new acceleration of inflation in the form of a significant increase in prices in the service sector and wage indexation remain. This rhetoric contrasts with yesterday’s comments by the head of the department, Andrew Bailey, who noted that more aggressive monetary policy easing was acceptable. Pill added that high borrowing costs do not affect investment in the economy and worry big business less than the uncertainty due to Brexit, the COVID–19 epidemic, and the escalation of geopolitical tensions. Meanwhile, the construction PMI increased from 53.6 points to 57.2 points instead of the expected decline to 53.1 points.

Japan

JPY weakens against USD, GBP, and EUR.

Investors are assessing the latest statements by the new Prime Minister of Japan, Shigeru Ishiba. He noted that the economy did not overcome the deflationary period, so it is premature to abandon stimulus. However, inflationary pressure is growing, reducing household incomes. To address this, the official intends to abandon monetary measures in favor of more traditional methods of supporting the population, such as grants and subsidies. Today, he formally instructed his cabinet to prepare a new package of measures designed to soften the blow to households from the rising cost of living. Ishiba also promised to make every effort to ensure a further increase in the low wage to 1.500K yen per hour from the current 1.055 yen per hour.

Australia

AUD is strengthening against JPY but weakening against the USD, GBP, and EUR.

The August home loans fell from 2.5% to 0.7%, and the investment in real estate fell from 5.1% to 1.4%, as the construction sector remains under pressure amid the high borrowing costs of the Reserve Bank of Australia (RBA) and peak inflation. However, most experts do not expect that the regulator will begin the monetary easing cycle until early next year.

Oil

Oil prices are rising amid ongoing geopolitical tensions in the Middle East, as experts fear that Israel will launch missile attacks on Iranian oil infrastructure soon. In this case, oil supplies from the region could significantly reduce, causing a new price growth. On the other hand, investors hope that even in the event of significant damage to Iranian production, Libyan oil will balance the lack of supply on the market. After the resolution of the internal political conflict, the country plans to increase oil production to the pre-crisis 1.18M barrels per day soon.