US non-farm payroll data improves on Friday

Friday's main event was the US non-farm payrolls employment data which, after -131,000 job losses in July, analysts had predicted a further -105,000 of job losses in August. The test for the US Dollar was to come up with better numbers than that, and it did. A net -54,000 people lost their jobs during the month and the July which was a 76,000 improvement between forecast and outcome.

Even though there was a big improvement on the forecast, nobody is suggesting the figures were 'good'. Even if the US economy were to add half a million jobs every month (which it doesn't) it would take nearly three years to make back the jobs that disappeared in 2008 and 2009. Nevertheless, Friday's data was better than expected.

For the US Dollar, this was bad news. After a brief flirtation with the tactic of selling the US Dollar in response to bad US economic news, investors changed their minds on Friday and decided the old ways were the best. If the US (or any other major economy) fails to meet the markets expectations, investors go for the safe havens provided by the US Dollar, the Japanese Yen and, more recently, the Swiss Franc. These are interesting times for the financial foreign exchange dealer.

Also on Friday, the UK services sector purchasing managers index
(PMI) fell by nearly two points to 51.3, disappointing the market and a reminder of the poor performance of the manufacturing PMI earlier in the week. It heightened concern among investors that coalition austerity would hobble Britain's economic recovery.

To rub salt into the wounds, the Eurozone services PMI went up by a third of a point to 55.9 and the US figure crept in just ahead of Britain at 51.5. The net result for Sterling was gains against the US Dollar and losses everywhere else.

Over the weekend New Zealand was rocked by an earthquake that will have aftershocks reverberating around the New Zealand economy as businesses look to the clean-up bill. The Kiwi Dollar has already fallen, and likely to be under pressure for some time.

It is a quiet week for data with Thursday standing out as the major day with the Fed Beige Book report preceded by the Bank of England's latest interest-rate decision. Other significant data to look out for in the UK include manufacturing and industrial production figures midweek, and July's trade balance on Thursday.