Sterling was hampered by an absence of positive Brexit rhetoric.
US labour-market data was mixed with a decline in unemployment to 50-year lows offset by weaker wages data while the payrolls increase was close to market expectations.
US recession fears eased slightly while comments from Fed officials were mixed. Market reaction was limited with US yields little changed, and the dollar was unable to make significant headway with markets still expecting a further Fed rate cut in October.
US equity markets made strong gains on short covering, but there was still notable underlying caution ahead of US-China trade talks.
Sterling was hampered by an absence of positive Brexit rhetoric. Oil prices recovered some ground following the US data, but demand concerns persisted.
Precious metals were little changed with a subdued dollar providing net protection.
Trading ranges were inevitably narrow ahead of the US jobs data with fragile confidence in the US economy. US non-farm payrolls increased 136,000 for September which was fractionally below consensus forecasts, although the August increase was revised to 168,000 from 130,000. Unemployment declined to 3.7% compared to expectations of an unchanged 3.7% and this was the lowest rate since at least 1975 as the household survey recorded a further strong increase in employment.
On Friday, there were reports that the EU Parliament head had rejected the UK Brexit proposal while Irish Prime Minister Varadkar stated that a deal was still possible, although EU officials insisted that the UK proposals were not yet the basis for agreement. According to Court documents, the government is committed to asking for a Brexit extension if there is no deal by October 19th, but uncertainty remained high. GBP/USD declined after the US jobs data, but there was support below 1.2300 while GBP/EUR made marginal gains on the day to trade near 1.1215 at the close.
CFTC data recorded a small decline in net short Sterling positions, but there is still substantial scope for short covering if there are positive political developments. Over the weekend, French President Macron stated that the EU should decide at the end of this week whether or not there is a realistic prospect of a deal by the end of October. Sterling was unable to make headway as it traded just above 1.2300 with tensions and volatility set to intensify during the week.
|07:00||German Factory Orders (M/M)(AUG)||-0.30%||-2.10%|
|08:30||GBP Halifax HPI (M/M)(SEP)||-||0.30%|
|09:30||Euro-Zone Sentix Investor Confidence(OCT)||-14||-11.1|
|15:20||FOMC Member Kashkari Speaks||-||-|
|18:00||USD FOMC Member Powell Speech||-||-|
|20:00||USD Consumer Credit(AUG)||-||23.29B|