020 7898 0500Perhaps it was bound to happen, but yesterday the dollar lost significant ground against sterling and the euro. Against the latter, most of the week’s gains were wiped out, while it weakened sharply against the pound following reports that a financial services deal between the UK and EU has been tentatively agreed. However, given the dollar’s performance throughout the last few months, the weakening is not as bad as it might look.
Trump Tweeted that he had spoken with China about trade and North Korea, with the former subject encouraging Wall Street which responded immediately, with the Dow Jones industrial average climbing higher. Initial jobless claims up to 27 October 2018 dropped to 214,000 from 215,000 the previous week, which was slightly worse than the 213,000 the markets had been expecting. The ISM manufacturing PMI for October dropped to 57.7 from 59.8 the previous month and below expectations of 59. It is the slowest growth in factory activity for six months which will be of some concern.
Today is extremely busy for US economic data, with September’s balance of trade figures due around midday. Later this afternoon, we will see the unemployment rate for last month, as well as non-farm payrolls. It will be interesting to see if the dollar can regain some ground lost yesterday or whether it will fall even further back.
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