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Nonfarms miss by a country mile

Nonfarms miss by a country mile

GBP
Bank of England Governor Mark Carney made no reference to monetary policy on Friday, and Sterling felt no impact from his speech. The Pound made up ground on both the Euro and Dollar as they struggled to gain strong support. The Dollar slipped following poor US employment data while lower bond yields hampered the Euro after further market speculation that the Eurozone economy was weakening slightly. Sterling pushed to test resistance above 1.4100 while the Euro dipped to near the 1.1500 support area.

USD

At the tail-end of a relatively quiet week, Nonfarm payrolls increased by a paltry 103,000 for March which was below consensus expectations of an increase close to 200,000. The US job creation disappointed but the larger picture illustrates the second largest job creation since the last recession. The Dollar dipped sharply after the data with no rhetoric from the Fed to tighten policy at a faster pace so the Euro moved to the 1.2280 area with Cable pushing past 1.4100 levels once more.

Further, Friday saw a solid improvement in manufacturing employment while construction jobs declined. Unemployment remained steady at 4.1% for the month, beating expectations of a slowdown to 4.0% whilst average hourly earnings met consensus forecasts, increasing to 0.3% on the month with the year-on-year increase at 2.7% from 2.6% previously. The positive data on the back of a weak Nonfarm payrolls report almost certainly stunted further Dollar loses.

Fed Chair Jerome Powell was in a positive mood on Friday with comments that risks to the economy were balanced and a stronger case was present for further gradual interest rate hikes. Further, San Francisco Fed President John Williams backed the case for three or four hikes this year whilst both Powell and Williams played down the immediate impact of the trade war with China.

The market will be waiting for Wednesday this week as Consumer Price Index data is released with FOMC minutes which will likely shed light on the rate hike cycle’s future.

EUR

The Euro was trading pretty flat over the weekend. On Friday we saw German industrial production in February down by 1.6% from the previous month, with the component of capital goods decreased by 3.1%. The EURUSD is widely expected to consolidate within the 1.22-1.24 range as we have seen since the beginning of January.

The European Central Bank (ECB) Vice President Vitor Constancio and the ECB chief economist Peter Praet are scheduled to speak later on today. On a data-light Monday, trade wars sentiment is likely to drive market movement.

Data to Watch:

06:45 CHF Unemployment Rate s.a (MoM) (Mar)
07:00 EUR Trade Balance s.a. (Feb)
14:00 EUR ECB Vice President Vitor Constancio speech
15:30 CAD Bank of Canada Business Outlook Survey
17:45 EUR ECB’s Praet Speech

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