Euro lower on the week

The euro fell to a low for the week of around $1.1670 against the dollar on Friday before recovering to just over $1.17. Still, it shed around a cent over the week as a whole, and is almost 4 cents off its recent highs back in early September, with the situation in Spain providing an unfavourable backdrop for the single currency

Sterling was under pressure for most of last week, losing ground against both the euro and the dollar, amid continuing domestic political difficulties for PM May. Meanwhile, a fifth round of Brexit talks get underway today with May calling on the EU to show ‘flexibility’ in response to her desire for a  “deep and special partnership’ between the EU and the UK

Employment in the US fell by 33,000 in September according to Friday’s ‘payrolls’ report, though this particularly weak outturn almost certainly reflected the impact of Hurricanes Harvey and Irma and is likely to be reversed in October. A better guide to the performance of the labour market last month is the unemployment rate  – according to the statisticians, the hurricanes had no ‘discernible effect’ on the unemployment rate – which fell to 4.2% (from 4.4% in August), its lowest level since early 2001

Given the continuing decline in the unemployment rate in the US, the Fed is on course to raise interest rates later this year with the market attaching a very high probability to a 25bps hike in December

Looking to the week ahead, Budget 2018 is presented here at home tomorrow, while US inflation is due on Friday. The Fed publishes the minutes of its recent meeting on Wednesday