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Daily Wrap Up 5 November 2021

5 Nov 2021 05:00 PM

Impressive US jobs data lifts stocks

Equity markets welcomed the latest jobs data from the US. The headline US non-farm payrolls update for October was 531,000, easily beating the 455,000 consensus estimate. In addition to that, the September reading was revised from 194,000 to 312,000. The unemployment rate dropped from 4.8% to 4.6%, which was a bigger fall than expected as economists were anticipating 4.7%. Average earnings ticked up from 4.6% to 4.9%. All in all, it was a great report, and it is a clear sign the US economy is recovering, hence why the S&P 500 and the NASDAQ 100 have set new record highs. The FTSE 100 hit a 19 month high and the DAX reached an all time high.

The US dollar index hit a 13 month high in the wake of the jobs data. The greenback has had a great run this week seeing as the Fed announced it will begin tapering it bond buying scheme this month. To a certain extent, today’s very impressive jobs data didn’t have that much of an impact on the dollar because the US central bank already revealed its tapering plans. If anything, the employment report adds justification to the Fed’s decision. EUR/USD dropped to its lowest mark since July 2020. Last month, the European Central Bank gave off the impression they are won’t be undoing their extremely loose monetary policy anytime soon, and it is a factor in the euro’s weakness.

Gold managed to hold up well despite the jump in the US dollar in the wake of the jobs report, and in the past few sessions. It is possible that all the talk about high levels of inflation is pushing up demand for the metal. We saw in today’s jobs report that earnings rose, and commodities have surged in the past 12 months, so the yellow metal seems to be benefitting from the fears about even higher inflation.

USD/CAD is broadly flat on the day thanks to a sharp rebound in WTI, as well as a solid set of jobs numbers from Canada. The Canadian employment change showed that 31,200 jobs were added in October, and the unemployment rate dropped to 6.7% - the lowest level in 19 months. Yesterday, oil fell to a one month low as it was reported that Saudi Arabia’s oil production is edging towards 10 million barrels per day, but today we seen a snap back in oil, which is helping the Canadian dollar.

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