The main event of the week just passed was the official US jobs report displaying a -33,000 drop in September nonfarm payrolls. While the number appears concerning on the surface, it was significantly smaller than the decline of -80,000 forecast by economists. The unemployment rate slid to a fresh 16-year low of 4.20%, signalling that the labour market continues to operate at or below “full employment,” while average hourly earnings rose by 2.90%. Separate data from the Institute for Supply Management revealed US factory activity at its highest level in September since 2004. An unexpected impact of the hurricanes was a surge in last month’s auto sales as US consumers replaced vehicles damaged by storms.
Across the Atlantic, the Pound tumbled to a one-month low against the US dollar after rumblings of a plot by Tory members to oust Prime Minister Theresa May burst into the public domain. The Euro was also under pressure against the greenback following last weekend’s Catalan independence referendum. The violence during the polls and the Spanish King’s uncompromising television address unnerved investors, with all eyes now set on the separatists. Shifting gears, the Reserve Bank of Australia kept its benchmark interest rate steady at a historical low of 1.50% while offering little hope of any policy tightening before 2018.