ADP Employment Change will be released later in the US, with an expectation for an additional 205K jobs added to the economy. This comes in a series of releases over the last three months showing strong additions since January’s 250K, with 234K and 235K following. It is interesting to note that, on these three occasions, expectations were all fewer than 200K, at 191K, 186K and 199K respectively. Can the strong number exceed expectations again today and make it four in a row?
Chinese authorities are expected to hold a press conference at 4:30 PM Local Time to announce retaliatory measures in response to US Trade Tariffs announced earlier. The US is to impose $50B of tariffs on Chinese products, covering around 1300 products and increasing tariffs to 25%. Products from the Aerospace, IT, Communications, Robotics and Machinery sectors are included. The US said this is to counter “unreasonable technology transfer policies” by Chinese companies.
German Markit Manufacturing PMI (Mar) was 58.2 v an expected 58.4, against the previous 58.4. This data set seems to have peaked in January at 63.3 when it exceeded the 2011 high of 62.7. The last two readings have shown a softening in the data, with an expectation for this reading to fall under the 60 mark. EURUSD fell from 1.23299 to 1.23186 following this data release.
Eurozone Markit Manufacturing PMI (Mar) was as expected, unchanged at 56.6. This dataset reached its peak in January at 60.6, when it exceeded the 2011 high of 59. The last two readings have shown a softening in the data, with this most recent reading stabilizing that fall. EURGBP moved up from 0.87496 to 0.87566 after this data release.
UK Markit Manufacturing PMI (Mar) was out with a headline number of 55.1 against an expected 54.5, from 55.2 prior. The consensus was for a further softening from the high of 58.2 created in December. However, this reading exceeded expectations, although it fell short of last month’s reading. Seasonally, Q1 is a time where this data point tends to weaken. Slower output growth was a factor cited in the weakening number, despite stronger new order inflows, strengthening job creation and demand. GBPUSD fell from 1.40867 and continued to slide for two and a half hours until it reached 1.40265.
New Zealand GDT Price Index was released coming in at -0.6% against -1.2% previously. This data fell less than expected, providing a bounce for NZDUSD from 0.72500 to 0.72629.
US FOMC Member Brainard spoke about financial stability at New York University’s Stern School of Business. Some of the comments made were: It is quite likely that rates rise above the predicted neutral level in the coming years. Financial asset valuations are stretched, cyclical pressures are building, and asset prices may be particularly vulnerable to outside economic shock. The risks to the US financial system are ‘moderate’, though the Fed is monitoring the effects of fiscal stimulus. The Fed may need to raise banks capital buffer if cyclical pressures build and vulnerabilities grow. Fiscal stimulus and other tailwinds could help re-anchor inflation expectations. Gradual rate increases are appropriate. US trade policy is a material uncertainty to economic growth.
EURUSD is up 0.08% overnight, trading around 1.22794.
USDJPY is down -0.06% in early session trading at around 106.533.
GBPUSD is up 0.18% this morning, trading around 1.40800.
USDCAD is down -0.18% in early trade at around 1.27840.
Gold is up 0.15% in early morning trading at around $1,334.35.
WTI is down -0.44% this morning, trading around $63.31.