US Unemployment data will be released this afternoon, ahead of NFP data on Friday. This is expected to show a slight rise in Initial Jobless Claims from the low reached last month. The trend here is for claims to continue to move lower, with the Fed highlighting concerns that the economy is running out of workers to fill positions. This will be indicated by any uptick in Average Hourly Earnings data tomorrow.
The US and Mexico are continuing NAFTA negotiations after President Trump signed a proclamation to camp US Troops on the border as part of his Border Wall Project. He is the fourth US President in a row to do this, so there is nothing new there. The Auto Content news is getting a second wind in markets and Canadian officials are positive on a “symbolic agreement in principle” showing consensus on some issues. However, the main sticking points are government procurement and dispute settlement.
Italian Unemployment (Feb) was 10.9% v an expected 11.0%, against the previous 11.1%. This dataset has fallen to levels not seen since 2012 after reaching a high of 13.4% in January 2015. The Rate is still high, comparatively speaking, but it has slid under the line this month to paint a positive picture. EURUSD moved up from 1.22877 to hit a high for the day of 1.23144 following this data release.
UK Construction PMI (Mar) came in at 47.0 against an expected headline number of 50.8, from 51.4 prior. The consensus was for a further softening from the high of 53.1 created in December but the data actually exceeded those expectations. The industry data has now slipped back under 50.0 from a high of 64.6 reached in 2014. This shows the weakness of the UK Construction sector, especially for new orders. The weather exacerbated the problem as employees were unable to attend work and materials were not delivered. Respondents were, however, positive about the coming months, with many hiring additional staff and planning expansions. GBPUSD fell from 1.40837 to 1.40282 in the hours following this data release.
Eurozone Unemployment Rate (Feb) was as expected at 8.5%, against the previous 8.6%. Consumer Price Index – Core (YoY) (Mar) was 1.0% v an expected 1.1%, from the previous 1.0%. Consumer Price Index (YoY) (Mar) was as expected at 1.4%, against the previous 1.1%. As expected, the Unemployment Rate reached a new low of 8.5%, a level not seen since April 2009. The recovery in the Euro area is still strong and growing. CPI is stabilizing around 1.2%.
US ADP Employment Change (Mar) was 241K v an expected 208K, against 235K previously, which was revised up to 246K. This data has remained above 200 for the last three months showing that the US economy is continuing to add jobs. The data series has beaten expectations for four straight months, with the strong revisions providing the icing on the cake. USDJPY recovered from its low of 106.116 to reach a high of 106.352 on this data release.
In his speech yesterday, the US Fed’s Bullard said that a trade war would be disruptive but may yield better arrangements, however, it also presents downside risks and uncertainty. He would wait and see what happens on trade before changing outlook. He sees 2.5% US GDP growth in 2018 and 2.2% in 2019. More uncertainty is likely keeping rates lower for longer. He said that it is possible the nominal yield curve will invert sometime in the next year.
US Markit Services PMI (Mar) was 54.0 v an expected 54.3, against a previous number of 54.1. This data missed on expectations after outperforming last month, but the month-on-month decline was expected. Markit PMI Composite (Mar) was 54.2 v an expected 54.1, against 54.3 previously. GBPUSD rose from 1.40725 to 1.40886, moved by this data release.
US ISM Non – Manufacturing PMI (Mar) was 58.8 v an expected 59.0, against 59.5 previously. The headline number was largely in line with expectations, albeit missing slightly to the downside. This is in the upper range of the data releases we have seen over the past seven years but off the highs of above 65.0 reached before the financial crisis. Factory Orders (MoM) (Feb) were 1.2% v an expected 1.7%, from -1.4% prior, which was revised up to -1.3%. This data missed the expected reading but the number remained in the recent range of 3.0% to -3.0%. The upward revision of the previous reading took some of the sting out of the miss. USDCAD fell from 1.28315 to 1.28146 following this data release.
In a speech about diversity in economics at Central State University, in Ohio yesterday, US FOMC Member Mester said that the diversity of views at US central bank leads to better policy.
EURUSD is down -0.06% overnight, trading around 1.22709.
USDJPY is up 0.13% in early session trading at around 106.917.
GBPUSD is down -0.10% this morning, trading around 1.40620.
USDCAD is up 0.05% in early trade at around 1.27745.
Gold is up 0.33% in early morning trading at around $1,328.70.
WTI is up 0.09% this morning, trading around $63.65.