On Friday, the Bureau of Labour Statistics (BLS) released the jobs report for the month of July. The numbers were good, but they were lower than what traders were expecting. According to the report, the economy added more than 157K jobs in July while the numbers for June were revised higher to 248K. The unemployment rate moved lower to 3.9%, which was in line with the expectations. This was after the rate jumped to 4.0% in May after falling to 3.8%. These numbers show that the US economy is strong and adding jobs. On average, the economy has added almost 200K jobs per month this year. However, the challenge has been on wage growth which has remained subdued when inflation is factored in. After the numbers were released, the dollar continued moving higher.
Another important data that came out was the ISM Non-Manufacturing PMI numbers for the month of July. The number measures the activities of the purchasing managers in the non-manufacturing industry. A higher number shows that the industry is doing well. The PMI released on Friday was at 55.7, which was lower than the expected 58.6. It was the lowest it has been since December last year and is an indication of the biting challenges of the current trade conflict.
On Friday, Trump’s National Economic Advisor, Larry Kudlow was interviewed on Bloomberg TV where he doubled down on the current trade conflict. The advisor said that the US – under the Trump administration – was unlikely to back down on tariffs. This came after China announced that it will retaliate against the US with tariffs on goods worth more than $60 billion. On Sunday, the Us president sent a tweet praising the tariffs and the fact that the Chinese economy appears to have been greatly affected by the tariffs. This week, the issue of trade will be monitored closely by traders around the world.
Already, China has moved to support its currency from further deterioration. On Friday, the PBOC announced that it would impose fresh laws on currency reserves. The new guidelines will limit the traders’ speculation that the yuan will keep on sliding. Under the new guidelines, banks buying and selling currency forwards denominated in US dollars for customers will be asked to deposit 20% of their sales at the PBOC. This guideline will go into effect on Tuesday and is aimed at preventing the macro financial risks and is intended to keep the yuan stable. Broadly, the PBOC wants a weaker yuan, but the current pace of weakness has not been good for the country.
During the weekend, Wall Street Journal (WSJ) revealed that the cryptocurrencies industry was experiencing extreme manipulation. This is a situation where people in Telegram groups push positive news on ICOs and cryptocurrencies launches. After pushing for positive stories, the participants buy the assets and dump them when the price rises. The new story is expected to increase the attention among the regulators on the cryptocurrencies. This is because in other markets – such as stocks – the pump and dump strategies are usually illegal.