Dollar investors are hopeful after the strong US NFP data and equity traders a little hesitant because of this
European markets are trading lower as investors are more cautious with their approach after the US NFP data. It was a robust number, not many expected the reading to come in at 304K but a lot of shine was taken off because the wage growth number slipped back and for investors that were a deal breaker. No one wants to see the wage growth number to lose momentum and given that the number missed the expectations by 0.1%, this means that the Fed has no leg to stand on with respect to their hawkish monetary policy.
Back in the UK, the prime minister will be heading back to Brussels with the only purpose in her mind that she needs to win some concessions. However, the EU leaders have been very firm with their approach and they have told the prime minister that there is nothing here for her because the deal she has is the only deal she is going to get.
This opens the door wide open for a possibility of the UK tumbling out of Europe with no deal. It is this threat which has made manufacturers really nervous and they are looking for alternatives. For instance, the Japanese car marker’s decision to ditch its second plant for the new vehicles is the direct of this result of this. In the past, the UK’s government bent many roles to keep Nissan in the country. But obviously, the firm needs to have its own safety net and their decision is based on this. These circumstances have made the traders a little nervous and this is the reason that we are seeing weakness in sterling.
In terms of economic data, we have the UK’s construction PMI’s number due later in the morning and the forecast is little on the soft side. The previous reading was 52.8 and expectations 52.6.