Investors have assessed a mixed set of labor-market indicators. Initial unemployment claims increased to 206,000, above forecasts of 205,000 and the previous reading of 204,000. The four-week average rose from 205,750 to 207,250, while continuing claims increased from 1.771 million to 1.779 million.

Meanwhile, JOLTS job openings reached 7.271 million in July, below expectations of 7.330 million, while the Automatic Data Processing (ADP) report showed that private-sector employment increased by 38,000 in August, missing forecasts of 47,000.

However, the official August employment report was considerably stronger. Nonfarm payrolls increased by 162,000, far exceeding forecasts of around 55,000, while the unemployment rate remained unchanged at 4.1%. The data strengthened expectations of a Federal Reserve interest-rate increase and supported the dollar.

Federal Open Market Committee (FOMC) member Christopher Waller previously said he would support keeping borrowing costs unchanged if incoming inflation data showed a sustained easing in price pressures.

Eurozone

The euro is strengthening against the yen but weakening moderately against the pound and US dollar.

German manufacturing orders increased by 2.5% in July, compared with expectations of 0.3%. The result was driven by a 126.4% surge in demand for other transport equipment, including ships, trains and aircraft. Foreign orders declined by 2.1%, while domestic orders rose by 9.1%.

At the same time, euro-area retail sales declined by 0.6% month-on-month in July instead of the expected 0.3% increase. On an annual basis, sales rose by 0.6%, below forecasts of 1.1% and the previous reading of 1.4%.

United Kingdom

The pound is strengthening against the yen and euro while showing mixed performance against the US dollar.

The UK construction purchasing managers’ index declined from 44.7 to 44.3 in August, falling short of market expectations. The indicator has remained below the 50-point growth threshold for 20 consecutive months amid weak demand and the economic effects of the Middle East conflict.

Bank of England Governor Andrew Bailey said weak productivity and shocks such as the COVID-19 pandemic had contributed to rising government debt across advanced economies, pushing borrowing costs higher. He also identified ageing populations and increased government defence spending as longer-term risk factors.

Japan

The yen is weakening against the euro, pound and US dollar.

Pressure on the currency increased after weak household-spending data. The indicator rose by only 0.5% month-on-month in July, well below forecasts of 2.6%, and declined by 3.6% year-on-year compared with expectations of a 1.6% contraction.

The figures may reduce the urgency of near-term monetary tightening, although they are unlikely to determine the Bank of Japan’s decision on their own. Board member Hajime Takata recently said the regulator should adjust borrowing costs flexibly in response to inflation rather than follow a fixed six-month schedule. FORECK.INFO’s latest USD/JPY forecast examines the main levels influenced by these policy expectations.

Australia

The Australian dollar is strengthening against the euro and yen while showing mixed performance against the pound and US dollar.

The currency is supported by gross domestic product data. Australia’s economy expanded by 0.4% in the second quarter, exceeding forecasts of 0.3%, while annual growth reached 2.1% instead of the expected 1.8%, supported by resilient domestic demand for goods and services.

China’s RatingDog General Manufacturing PMI, compiled by S&P Global, also supported sentiment. The index increased from 50.9 to 51.5 in August, exceeding forecasts of 51.0. The result points to stronger manufacturing activity in China and improves the outlook for Australian exporters.

Oil

Oil prices are correcting lower.

The decline appears largely technical, as longer-term fundamental factors continue to support prices. Geopolitical tensions in the Persian Gulf remain elevated, although the intensity of strikes between the United States and Iran has eased over the past 24 hours. Commercial traffic through the Strait of Hormuz also remains severely restricted.

According to Kpler data, four commodity vessels crossed the waterway on Thursday, down from nine on Wednesday and well below the ten-day average of approximately 15 vessels.

Meanwhile, economic pressure on Iran continues to increase. The European Union has welcomed additional US-led economic pressure and pledged continued coordination with Washington and other G7 partners. However, Brussels has not formally joined the US sanctions operation or announced equivalent new restrictions. The EU continues to enforce its own sanctions related to Iran’s nuclear and ballistic-missile programs and threats to freedom of navigation.

Restricted shipping and continuing geopolitical risks therefore remain supportive for crude prices despite the current correction. The latest FORECK.INFO Brent outlook examines the potential move toward $100.