Previous Day's Market Highlights
Markets struck a relatively cautious tone on Thursday as investors eagerly await today’s US labour market report. The major mover was the pound, which recorded its first day of losses in four against the dollar, losing around 0.8%, with a similar fall coming against the euro. A lack of developments in Brexit talks between the Conservative and Labour parties which are continuing to try and find a way forward that can command a majority in Parliament. A lack of news was taken as a sign that no breakthrough had been made, nor was one looking likely to be made.
Elsewhere, the euro was also modestly weaker, losing around 0.2% after the minutes of March’s ECB policy meeting struck a relatively cautious tone. Policymakers noted that data continued to be weaker than expected and that such economic weakness is seen as longer-lasting than previously, raising concerns over a prolonged economic slowdown across the bloc. In contrast, the dollar gained for the first day in four, adding 0.3%, with the greenback finding some support after better than expected jobless claims numbers. Weekly claims fell to just 202,000 - the lowest level since 1969, potentially setting up for a strong payrolls report today. Other currencies remained relatively well-confined to their recent trading ranges, with a lack of news or economic releases to stimulate market volatility.
Away from FX, equity markets painted a mixed picture. European bourses fell, paring some gains after their recent rally, with the pan-European Stoxx 600 losing 0.3%. In contrast, the US benchmark S&P 500 gained 0.2%, edging closer to a 6-month high. Finally, oil prices remained relatively well supported, with Brent crude breaking above the $70bbl mark for the first time since November 2018.
Today's Market Highlights
Today’s focus will lie with the US labour market report, with expectations for headline nonfarm payrolls to bounce back after a disappointing showing last month. Consensus is for a payrolls figure of around 180,000 - broadly in line with the 3-month average of 186,000. However, as always, revisions to the previous two months’ figures will also attract significant attention, especially after last month’s unexpectedly low 20,000 figure. Also released will be average hourly earnings, expected to increase at 3.4% on a year-on-year basis as well as the unemployment rate, expected unchanged at 3.8%. On the whole, the report is expected to continue to evidence the tight labour market conditions in the US, which should correspond with an increase in wages.
Elsewhere, no data is due from either the UK or the eurozone, though focus will continue to lie with any news flow relating to the UK’s withdrawal from the EU. Labour market numbers from Canada will also be eyed, with expectations for the unemployment rate to remain at 5.8% and the employment change figure to be around 0 - exemplifying the soft patch the Canadian economy is experiencing.
Looking ahead to next week, the data calendar is relatively light, with most major events coming on Wednesday. The highlight is likely to be the release of minutes from the Fed’s March policy meeting, with markets likely to pay close attention to the reasoning behind the Fed’s dovish U-turn. Other notable points include the ECB’s latest policy decision, GDP figures from the UK as well as CPI inflation from the US.