In the London session we saw the PMI Construction figures which showed the house building activity in the UK grew at its slowest pace for over three years last month. The March construction PMI data remained steady at 54.2. The unemployment rate in the Euro region booked at 10.3% for February, following the upwardly revised 10.4% seen in January. This is the lowest level since August 2011. The unemployment numbers are encouraging but there is still big disparities across the region with many countries, such as Spain and Greece, still with a jobless rate above 20%.
Factory orders in the US dropped 1.7% and followed the 2015 trend of decline. The figures cam in better than forecasted but was much worse than the previous month. The culprits of the weak reading has been the appreciation of the US Dollar, where a strong dollar hurts their competitiveness as exports become more expensive and low oil prices has pushed factory orders lower. We may see factory orders in the coming months boosted by a weaker US Dollar.
The big news overnight was a speech made by FED Rosengren. Fed Chair Janet Yellen was very dovish with her comments last week on interest rates saying the FED will implement a cautious and gradual rise. FED Rosengren was much more hawkish as he shared his belief that the resilience of the US economy, faster and more frequent interest rate hikes are likely to surprise the markets. It seems like we are getting differing views from FED members and we'll get a better idea when the FOMC meeting minutes are release tomorrow.
Crude oil fell again over skepticism over a production freeze by the OPEC nations. Saudi Arabia have clearly stated that they will freeze production once all opec nation freeze and the main culprit is Iran who will not freeze production until output levels are reached pre-sanctions. With renewed bearishness in oil now and a head and shoulders pattern which is playing out, I see oil prices potentially heading down to the $32.50 level.