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Weekly Outlook: October 8 - 12

Release Time:2018-10-08 02:08

With a fairly light week on the economic calendar investors will continue to monitor the effects of rising U.S. government bond yields on markets, when U.S. bond markets reopen on Tuesday after Monday’s Columbus Day holiday. Concerns over Italy’s rising debts and strains in emerging markets will also remain in focus as markets continue to digest Friday’s mixed U.S. non-farm payrolls report. The Labor Department reported Friday that the rate of job creation slowed sharply in September, likely due to the effects of Hurricane Florence, while wage growth also eased. The U.S. economy added 134,000 jobs last month, the fewest in a year, though the figure for August was revised up to 270,000 from 201,000. Annual earnings growth came in at 2.8%, down from 2.9% in August. While jobs growth slowed the unemployment rate fell to a near 49-year low of 3.7%, down from 3.9% in August. The report did little to alter expectations that the Federal Reserve will press on with plans to raise interest rates again in December and beyond. The dollar slipped lower following the report, with the U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, slipping 0.13% to 95.31 late Friday. The index ended the week up 0.6%, its second straight weekly gain.

Hawkish Fed speakers and strong U.S. economic reports have supported the greenback in recent weeks. The dollar was slightly lower against the yen late Friday, with USD/JPY down 0.15% to 113.72, to end the week almost unchanged. The euro was fractionally higher, with EUR/USD at 1.1523, not far from Thursday’s six-week lows of 1.1462. For the week the euro was down 0.73%. The single currency has been pressured lower by worries that the Italian government’s spending plans could trigger another round of the country’s debt crisis. Meanwhile, the pound was sharply higher; with GBP/USD climbing 0.74% to 1.3117 following reports that EU sources claimed a Brexit deal is very close. Sterling also gained ground against the euro, with EUR/GBP down 0.71% to 0.8778 in late trade.