The big events for the week wil be the FED, BoE and ECB, but first are some final notes on Friday's NFP.
Friday's number was the lowest seen since November 2004 and the private sector generated only 63,000 jobs. Economists often use a 3 month moving average when looking at macro indicators in order to smooth out the monthly ups and downs. The 3 mo MA for the NFP is currently 118,000, down fairly sharply from the previous 3 mo MA of 195,000. The report also indicated that labor participation was down and the duration of unemployment was up.
It likely will be noted that the trend for jobs is clearly down and that if the trend persists, unemployment will rise as jobseekers start to outnumber job openings. A continuation of this trend will also cause the Fed to eventually cut rates.
For this week, we'll be looking very closely at what all three banks have to say about the future and try to apply that to where currency rates are likely to go.
In the meantime, here's an opinion on a global macro trend:
Conventioal wisdom used to dictate that an unemployment rate below 6% would trigger inflation, but globalization has changed this. The US economy has seen declining unemployment in recent years with fairly stable rates of inflation. This can be attributed to the fact that average hourly earnings have been flat or declining while productivety has increased, resulting in an increase of the share of profits for corporations and fueling the gains seen in the stock markets.
What globalization has become so far and is likely to continue as, is a trade of emerging market workers (cheap labor) for established (G7) market consumers (the spenders). The 3 mo moving averages for the NFP could be a leading indicator that this "trade-off" will continue. What is also likely to continue is the trend for emerging market economies to grow at faster rates then the established G7 economies and that rise of multi-national corporations who import cheap labor and export finished goods and services with the resulting higher profit margins will only expand.
Friday's number was the lowest seen since November 2004 and the private sector generated only 63,000 jobs. Economists often use a 3 month moving average when looking at macro indicators in order to smooth out the monthly ups and downs. The 3 mo MA for the NFP is currently 118,000, down fairly sharply from the previous 3 mo MA of 195,000. The report also indicated that labor participation was down and the duration of unemployment was up.
It likely will be noted that the trend for jobs is clearly down and that if the trend persists, unemployment will rise as jobseekers start to outnumber job openings. A continuation of this trend will also cause the Fed to eventually cut rates.
For this week, we'll be looking very closely at what all three banks have to say about the future and try to apply that to where currency rates are likely to go.
In the meantime, here's an opinion on a global macro trend:
Conventioal wisdom used to dictate that an unemployment rate below 6% would trigger inflation, but globalization has changed this. The US economy has seen declining unemployment in recent years with fairly stable rates of inflation. This can be attributed to the fact that average hourly earnings have been flat or declining while productivety has increased, resulting in an increase of the share of profits for corporations and fueling the gains seen in the stock markets.
What globalization has become so far and is likely to continue as, is a trade of emerging market workers (cheap labor) for established (G7) market consumers (the spenders). The 3 mo moving averages for the NFP could be a leading indicator that this "trade-off" will continue. What is also likely to continue is the trend for emerging market economies to grow at faster rates then the established G7 economies and that rise of multi-national corporations who import cheap labor and export finished goods and services with the resulting higher profit margins will only expand.
