The US payrolls report on Friday night was solid, despite the headline increase of 214K in October coming in below the 235K expected. September payrolls were revised up by 8k to 256k and August up by 23k to 203k. That was the second upward revision to August, meaning that the mid-summer dip in payrolls growth (originally reported as 142k) now never happened. Payrolls have now been above 200K for nine consecutive months.

The unemployment rate fell by 0.1% to 5.8% thanks to a 683k surge in the household survey employment measure, but there was no sign of an increase in wage pressures. Earnings rose 0.1% in October and the annual rate was unchanged at 2.0%yoy.

US Treasury yields fell across the curve post-payrolls, 10s ending -9bps at 2.30%. US equity markets lost ground early, but ended the session slightly higher with the Dow up 0.11% and the S&P 500 up 0.03%.

The USD lost ground after payrolls, with the AUD and NZD the best performers in the G10, +0.91% and +0.82% respectively on Friday night. A 2.4% increase in the gold price and +0.6% for iron ore further helped the AUD.

The AUD ended the week at 0.8637, but has opened a bit higher this morning and is near 0.8660 USD. It’s been helped by Saturday’s China’s trade data which showed the surplus lifting to $45.4bn in October, better than the $42.0bn expected. Exports rose 11.6%yoy (10.6% expected) while imports rose 4.6% (5.0% expected).

RP Data’s weekend house price summary showed Sydney prices up 0.3% in the past week, while Melbourne prices fell 0.3%. The 5-city average was up 0.1%. Auction clearance rates slipped sharply, Sydney to 69% from 78.5% and Melbourne slipping to 63.8% from 68.2% (but that was on a low number of auctions due to Melbourne Cup weekend).

Coming Up

Today in Australia the housing finance approvals data for September are released. All the focus here has been on investor approvals, which have stepped up to an even higher level in the past couple of months. For the number of owner-occupied approvals we expect to see a 2% fall, but a small rise is anticipated for the value of approvals.

The October NAB Business Survey is released on Tuesday, while the consumer confidence data for November are out on Wednesday. Also on Wednesday, the Q3 Wage Price Index is expected to rise by 0.7%, a bit higher than the 0.6% growth in Q2, lifting the annual pace from 2.6% to 2.7%. However it is still very modest wages growth that will ensure the RBA remains very comfortable with its accommodative policy settings.

Offshore, Chinese CPI data today are forecast to show a steady 1.6%yoy outcome in October. On Thursday, industrial production, retail sales and fixed investment annual growth rates are also expected to be little changed in October.

The Bank of England’s November Quarterly Inflation Report is released on Wednesday, while US retail sales for October are released on Friday. The market is expecting a 0.2% rise after the 0.3% fall in September.

Also on Friday, German and Eurozone Q2 GDP are released. Cons2355ensus estimate for Germany is +0.1%, which if correct would mean the Eurozone’s largest economy just avoids the technical definition of recession after GDP fell by 0.2% in Q2. For the Eurozone as a whole, consensus is also 0.1%, after the flat outcome in Q2.

Overnight

Equity markets: Dow Jones Industrials +19 points to 17,574, +0.1%, S&P 500 +0.0%, Nasdaq -0.1%. Eurostoxx 600 -0.5%, FTSE +0.2%, Dax -0.9%, CAC -0.9%. Nikkei 225 +0.5%, Shanghai -0.3% and ASX 200 +0.8%. ASX SPI futures this morning -0.1%.

US bond yields: 2s at 0.50% (-5), 10s at 2.30% (-9). WTI oil at $78.65 (+0.9%), Gold at $1169.80/oz (+2.4%). Base metals: LME copper +0.8%, nickel -0.5%, aluminium -1.0%. Iron ore $75.8/t, +0.6%. Soft commodities spot futures: wheat -1.1%, sugar +1.4%, cotton +1.2%. The AUD/USD is at 0.8662.

For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets

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