Height ho, height ho, it's off to work we go?

- US Financial system in crisis?

- UK grows by 0.3% in January

- All eyes on US jobs data

Yesterday

• Weekly jobless claims in the US jumped to the highest since December, causing the USD to lose ground ahead of today's nonfarm payroll and wage numbers.
• With slim pickings of market information, GBP gained across the board after the British Chamber of Commerce commented that they believe the UK will avoid a recession this year.
• Stocks dropped aggressively yesterday after Silicon Valley Bank Financial announced losses on its bond portfolio. The news caused panic in banking stocks and raised questions if other banks could be in a similar situation. CHF benefited on the back of fleeing to safe havens as opposed to USD, given the concern over the US banking system.

Today

Market rates

* Daily move - against G10 rates at 5:00pm, 09.03.23

** Indicative rates - interbank rates at 5:00pm, 09.03.23

Data points

Speeches

• None today.

Our thoughts

After a week where we have seen a lot of USD buying, it was no surprise to see some profit-taking after weekly jobless claims climbed to the highest since December. Markets are expecting an additional 225,000 jobs added in February following that monster print of 517,000 in January, and wages set to rise to December’s level. We saw data this week already suggest that the job market remains tight, and should we see higher than expected figures today, then we could well see a breach of the week's earlier losses on GBPUSD and EURUSD.

January’s PMI figures came in higher than expected for the UK, so it may not come to much of a surprise to see economic growth for the UK up at 0.3% in January, versus an expected figure of 0.1%. The data suggests that the UK could well avoid a recession in the first half of the year. GBP is up marginally this morning, but any move higher seems limited given the size of the UK’s financial sector and any exposure to the US banking stress.

Chart of the day

The US jobs data will be the highlight of the day and whether the data continues to support the idea that the Fed will need to keep hiking rates further.

We saw yields on 2-year treasuries rise over the course of February, following that 517,000 nonfarm payroll print which caused USD to gain across the month. Another set of strong job numbers and we could see this trend continue

Source: Bloomberg Finance L.P.

Have a great day.