The U.S. Dollar remains trading near its best levels overall since the end of July as labor data suggests more stability than expected while other market classes look to improve after declining
Overview
Although we do not have eyes on official employment figures, the ADP Employment Change figures from October were released earlier showing more added jobs than expected at 42K vs. 30K.
September saw a contraction so the positive figure is a sign that losses may have been minimized entering the fourth quarter. Fed officials have cited concern with labor, but the print makes it seem like the economic situation may not merit jumping into interest-rate slashes, thus giving credit to Fed Chairman Jerome Powell for his analysis at the last press conference. Odds of a 25-basis-point reduction in December stand at just 66.0%.
Later at 9:45AM we will get S&P Global Composite Purchasing Managers Index from last month, which could help the argument for keeping borrowing costs untouched. Overnight, elections across various states took place, which economists are hoping can convince politicians on all sides to put campaigning contrasts aside and re-open the federal government.
What to Watch This Week…
- BOE & Banxico meetings tomorrow
- S&P PMIs at 9:45AM
- Monex USA Online is always open
GBP ⇓
The Pound continues to struggle to find its way back to gains while trading around its weakest point since April. Tomorrow, the Bank of England will meet, and it is not widely expected to cut interest rates though traders believe there will not be consensus amongst voting monetary policy committee members. Lately, the lack of productivity and revenue struggles have made it difficult for the current administration to spend and stimulate growth. At the same time, changes in trade and tariffs have made food and other items more expensive. With “stagflation” plaguing the mentality, there will be arguments made for which issue to tackle first: low growth or prices being stubborn and higher.
MXN ⇓
The Mexican Peso dropped to its weakest point against the dollar since start of September, but it is mounting a quick comeback. The decline in value was a natural result of poor economic data in the form of Gross Investment, which in August contracted far more than expected. The yearly average is now way worse than forecast coming in at (-10.4%) over the estimated (-7.0%). It is clear that the “friendshoring” and “nearshoring” policies that gave Mexico an upper hand in shipping and trucking activity while increasing manufacturing have slowed down dramatically from 2024 highs. A bit of a silver lining was the August Private Consumption which outdid a negative expectation of (-0.8%) with 0.1% expansion. We shall see how Banxico policymakers feel when the central bank gathers tomorrow.
