Previous Day's Market Highlights
Friday’s main focus was the monthly US labour market report, which showed headline nonfarm payrolls bouncing back from a disappointing February, with the US economy adding 196,000 jobs in March, a level more in line with the 180,000 3-month average. Further positives came in the shape of upward revisions, by a net 14,000, to January and February’s payrolls figures, though this was not as significant as some had expected. Other details of the report were more mixed, with average hourly earnings disappointing, increasing at just 0.1% on a month-on-month basis and at 3.2% on a year-on-year basis. The unemployment rate held steady at 3.8% while the participation rate fell to 63%, a slight negative for the late-cycle US economy. Overall, the report is likely to give the Federal Reserve little reason to move away from their ‘patient’ policy stance, with a lack of rising inflationary pressures despite a tight labour market. The labour market report had little overall effect on the dollar, which gained slightly more than 0.1% over the course of the day.
Elsewhere, sterling fell for the second consecutive day as the pound was weighed down by the reported breakdown of talks between the Conservative and Labour parties over a way forward on Brexit. The pound lost 0.3% against both the euro and the dollar over the course of the day. Meanwhile, the euro traded flat, holding just above the key $1.12 support level, while the Canadian dollar edged lower after an uninspiring jobs report. Despite the unemployment rate holding steady at 5.8%, as forecast, data showed employment falling by 7,000 in March. An increase in average hourly wages, to 2.32% on a year-on-year basis, did little to help the Canadian dollar, though the labour market continues to be one of the better-performing areas of the Canadian economy. The loonie lost 0.2% over the course of the day.
Away from FX, equity markets were boosted by the conclusion of another round of US-China trade talks. Markets gained on both sides of the Atlantic, with the pan-European Stoxx 600 adding 0.2% and the US benchmark S&P 500 adding 0.45% to record its second straight weekly gain. Oil prices were also well supported with both Brent and WTI reaching their highest closing levels in 5 months. Brent gained 1.4% over the day, settling above $70bbl, while WTI added 1.6% to trade at $63.11bbl.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
The week begins with a quiet economic calendar, with no major data due from the UK. Markets are likely to focus on this afternoon’s US factory orders figures which tend to act as a useful leading indicator of future production. Expectations are for orders to have fallen by 0.6% on a month-on-month basis in February, compared to a 0.1% gain previously. Elsewhere, data is limited to third tier releases, though markets will likely pay some attention to housing starts and building permits from Canada alongside investor confidence figures from the eurozone - though neither release typically has much market moving potential.
Looking ahead to the remainder of the week, focus is likely to fall with central banks in the shape of the ECB’s latest monetary policy announcement and the release of minutes from the Federal Reserve’s March meeting. Regarding the former, markets are note expecting any policy changes from the ECB, though focus will be on policymakers’ reaction to continued poor economic data along with the impact of negative rates on the banking sector amid speculation of tiering the structure of the deposit rate. Meanwhile, markets will pay close attention the the Fed’s minutes, with investors looking for further clarification of the reasoning behind the Fed’s dovish policy shift last month. Economic data is lacking, with only US CPI and UK GDP figures of note.
Finally, Brexit remains firmly on the radar of investors ahead of Wednesday’s crunch EU Summit in Brussels where EU leaders are set to discuss a further extension of the Article 50 negotiating period. The Prime Minister has formally requested an extension until 30th June, though EU leaders are unlikely to accept such a date. The most likely scenario is the proposal of a ‘flextension’ whereby the Brexit deadline would be extended by as much as a year, with the UK having the option of leaving the bloc as soon as a deal had been ratified on both sides. Back in Westminster, cross-party talks are likely to continue in an attempt to find a consensus on the way forward, along with the possibility of a further round of indicative votes in an attempt to find a way of breaking the legislative deadlock.
Today's Economic Calendar
|1:15pm||CAD||Housing Starts (y/y)||193k||173k|
|1:30pm||CAD||Building Permits (m/m)||0.2%||-5.5%|