US unemployment rate edges higher.
US non-farm payrolls increased 315,000 for August and slightly above consensus forecasts of 300,000 after a revised 526,000 increase the previous month. Manufacturing jobs increased 22,000 on the month with a 16,000 gain in construction employment and net gains in most sectors.
According to the household survey, the unemployment rate increased to 3.7% from 3.5% with a strong increase of over 440,000 in the number of employed offset by a significant increase in the participation rate on the month. There was a sharp decline in the number of people not in the labour force which suggests that the supply of labour has improved.
Average hourly earnings increased 0.3% for the month compared with expectations of a 0.4% increase and the year-on-year increase held at 5.2%.
The slightly weaker than expected wages growth, coupled with evidence of increased labour-market supply triggered some optimism that the Federal Reserve might be able to take a slightly less hawkish stance.
Late on Friday, Gazprom announced that gas supplies through the Nord-Stream pipeline would not re-start on Saturday due to an oil leak and no timetable was issued for a resumption of supplies.
Markets assumed that the move was in retaliation for the G7 move to cap Russian oil prices.
Gas prices surged at the European open on Monday.
Fears surrounding energy prices were important in triggering another dip in confidence within the Euro and Sterling.
EUR/USD dipped to 19-year lows just below 0.9900 and GBP/USD slumped to fresh 30-month lows at 1.1450.
The new UK Prime Minister will be formally announced later on Monday with very strong expectations that Truss will be declared the winner. Markets will be looking closely at immediate proposals on taxation, spending and additional support for both households and businesses.
The Reserve Bank of Australia will announce its latest policy decision on Tuesday with consensus forecasts for a further rate increase to 2.35% from 1.85%.
The Euro gained an element of initial support from expectations of a hawkish ECB policy stance. The dollar edged lower after the US jobs data with hopes of increased labour supply and slightly slower wages growth. EUR/USD peaked just above 1.0030.
Euro-Zone fears increased sharply after Friday’s European close as Russia announced that the Nord-Stream pipeline would not re-open at the weekend. EUR/USD dipped sharply to near 0.9950. There was no relief on Monday with EUR/USD sliding to 19-year lows below 0.9900.
Lower US yields sapped dollar support to some extent in global markets. USD/JPY found support just below 140.00 and traded around 140.40 on Monday.
The Swiss franc dipped sharply early on Friday, but then posted strong gains on European gas fears. EUR/CHF dipped sharply to 0.8760 with USD/CHF trading just above 0.9800.
Sterling gained brief respite after the US jobs data, but overall remained under pressure. GBP/USD slumped below 1.1500 and posted a fresh 30-month low just below 1.1450. GBP/EUR posted limited net gains to 1.1580 with both currencies under pressure.
Commodity currencies were unable to hold gains as dollar strength and weaker equities sapped support. AUD/USD found some support below 0.6800, but traded just below this level on Monday. USD/CAD found support at 1.3075 and rallied to just above 1.3150 on Monday.