Look Ahead 6/10/23: NFP; German factory orders; Halifax; Baker Hughes; JD Wetherspoon

(Video Transcript)

German factory orders a good indicator

Hello, I'm Angeline Ong and welcome to your Look Ahead to Friday, 6 October 2023.

We start with the biggest economy in Europe - Germany - and we're looking at the factory orders. This is a very important indicator when it comes to manufacturing and this is particularly key given we recently had concerning figures out of Germany because the factory orders for back in July was the worst since lockdown in 2020.

Since then, the European Central Bank (ECB) has said that it stands pat to increase interest rates in case inflation doesn't come down further. All this means is it constricts any sort of expansion, corporate borrowing and any sort of growth if you like in the economy if interest rates stay high.

UK housing sector closely tied to the economy

We've also got the Halifax House Price Index out of the United Kingdom. The consensus there, -0.8% month-on-month. For those of you who are familiar with the UK housing industry, it's very much tied to the economy because it's quite unique actually.

Most people have many of their assets or indeed a dominating part of their portfolio dedicated to their housing, which is quite, has got peculiar, has meant that the UK economy has peculiar quirks.

It does mean that morale is affected by data pointing to the direction of house prices. Also, the housing sector is open to the world really, because you could come to the UK and buy property even though you don't actually live here as your main abode.

Just to show you the pound versus the dollar, because this is also linked to interest rates, the Bank of England deputy governor Ben Broadbent has said that it was an open question whether interest rates increased further.

Pundits still on the fence about BoE's decision

There were rising hopes that the Bank of England (BoE) has finished with its current tightening cycle. But there are those out there that believe that perhaps more has to be done. And especially given the US Federal Reserve has also left the door open to another rate hike before the end of this year.

Then we come to our set piece, which is the non-farm payrolls (NFP), which is out on Friday. This is a key figure of the week and we'll have special analysis with Daily FX's Richard Snow with us to break that number. Expectations are for 170,000.

However, bear in mind that this figure, if it surprises on the upside or on the low side, we could see market-moving events both in equities and also in the forex market. If we get a weak number, for example, then perhaps that could stoke hopes that the Fed may hit the pause button and not carry through that last interest rate hike before the end of this year that they have hinted at.

Expect a volatile session for oil

Then we've also got the Baker Hughes oil recount. This is really going to be quite a volatile session for oil as it has been this week, given we've had OPEC+. And it's also in a week when we've seen crude fall back. This is the hourly chart. But let me show you the daily chart to give you a better idea of where we stand. There you have it.

And we see many big oil majors like your Chevrons, your Exxon Mobils come off on all-sessions on IG as crude prices start to really quite fall in the last session.

On the corporate front, we also have JD Wetherspoon reporting four-year earnings. JD Wetherspoon, the British pub chain, that has weathered the cost-of-living crisis. They have said that, however, prices do seem to be stabilising now.

But it'll be interesting to see what they say about consumption trends, especially in a time when everything else is going up and anything that is discretionary and non-essential is not being bought by consumers.

So going out for leisure activities, hanging out in the pub is also going to be impacted by this. But pay special attention to what they say about consumption in the months ahead, particularly as we count down to the Christmas period.

And that's the latest for your Look Ahead. For more analysis, do check in on IG.com and @AngelineOng on Twitter. Until then, this is IGTV.