The Non Farm Payroll number hit the markets with a bang. Pundits were expecting only marginal increases in jobs added to the Non Farm sector of the economy, but it came in massively above expectations. The numbers was 467,000 jobs added, while the headline unemployment rate rose to 4%, and markets rallied strongly on the news. Equities spiked upwards, until the reality of the number, was realised. The devil, of course, was in the detail. The US Bureau of Labour, who releases the data, had massively ‘seasonally adjusted’ the numbers. They had swapped out jobs from 2021 to 2022. Perhaps markets cottoned onto this, because the equity rally disintegrated in the final minutes of trade for the week?
Inflation is exploding across Western economies, with the ECB finally recognising that 5.1% CPI, is inflationary and the highest on record. The ECB had ignored inflation, as the lock-downs and restrictions imposed by many member Countries, had killed economic growth and they surmised inflation. No unfortunately PPI continued to spiral out of control, the energy crises enveloped the continent and geo-political ructions from the Ukraine reverberate. The Bank of England have recognised the threat of inflation and raised rates twice. They will continue to raise rates and probably institute QT, to reduce the massively bloated balance sheet. The EUR traded up on the hawkish ECB commentary, holding around 1.1450, while the GBP drifted to 1.3530.
Commodity currencies remain temporarily rejuvenated, with the AUD trading above 0.7050, while the NZD consolidated above 0.6600. Oil prices have surged above US$90/barrel,but this is not a demand driven phenomena. Inflation remains key to markets in the coming week, while energy prices will be tested by economic and Geo-Political developments.