All eyes were on US non-farm payrolls on Friday. Although President Trump may have spoilt the surprise, the data was still a big beat and the US dollar strengthened a little on the news (see above). The wages data was also strong and showed that average hourly earnings were up 0.3% vs. 0.2% expected. The dollar strength was most tangible in the USD/JPY cross, the pair rallying from 109.10 to 109.75. It was less tangible vs. the likes of the euro and pound, perhaps as investors offered the fact (having bought the rumor following Trump’s tweet).
The trade war rhetoric has been an ongoing one over the weekend. G7 ministers met, and the EU, China, and Canada took the chance to make it very clear they were not happy by the decision of the US. There has not been too much of a reaction in currency markets, but the story is likely to bubble away in the background all week and so could have an impact on currency markets at some point this week. Watch this space. Markets will be keenly attuned to commentary from President Trump as he addresses the G7 summit with clues regarding protectionist trade policy dominating risk demand.
The docket for US data is looking a bit thin this week with ISM Non-Manufacturing PMI being the most significant release of the lot. The ongoing trade war, Trump tweets and political events in Europe will likely be the key drivers.