BNY Mellon

Did we finally get a jobs report that suggests substantial further progress in the labor market – the Fed’s standard for tapering asset purchases – is not too far away? Between July’s headline increase in employment of 943,000 jobs, and June’s upward revision to 938,000, perhaps we are seeing a string of strong jobs reports.

There were some seasonal adjustment quirks that flattered the headline number, namely fewer teachers getting laid off in July at the end of the school year than is normal (due to school closures and the like). The number for private payrolls was up 703,000, for example, which is actually down a touch from June.

Skeptics might be able to seize upon that and claim that private sector hiring is, in fact, plateauing. But that’s about the only weakness we can see in an otherwise strong-across-the-board print. In the establishment survey of payrolls, job gains were broadly spread out across industries, and those hardest-hit sectors during the pandemic saw the biggest gains. Leisure and hospitality increased by 380,000 jobs, for example, and within that category, restaurants were up by over 250,000. From the household survey, total employment was up by over one million, even more than jobs created in the payroll survey.

Unemployment declines by 782,000. Encouragingly, the median duration of unemployment fell to 15 weeks, much lower than it has been of late, and labor force participation was up to 61.7% of all adults, still well short of pre-pandemic levels, but the highest since the lockdown.

ING

GBP: Political scuffle unlikely to derail GBP rally

The week starts with media reports suggesting some tension between Prime Minister Boris Johnson and his Chancellor Rishi Sunak - such that Sunak could get demoted. Sunak is seen as one of the rising stars in the Tory party and a safe pair of hands at the Treasury, such that any demotion could briefly hit GBP. Yet these are quiet summer markets and FX traders will likely focus their attention on what any fresh inputs mean to the newly-minted hawkish policy from the Bank of England.

The highlight here will be Thursday's 2Q21 UK GDP release, where we see quite a strong 5% quarter-on-quarter reading. We favour EUR/GBP continuing to press strong support at 0.8470, beyond which the move could quickly extend to 0.8400.