US employment setting the scene for NonFarm payrolls
UK construction PMIs shrank in March, printing a lowly 47, (50+ indicating expansion) down from 51.4 the previous month. The figure fell well below consensus forecasts and was the lowest reading since July 2016. Civil engineering recorded the worst performance for five years although the beast from the east was blamed for the slowdown. The data had little impact given the weather-related distortions and today’s services sector data looming on the horizon.
UK bond yields edged up, helping to underpin the Pound, although overall risk conditions were still dominant. The Euro found support on approach to 1.1475 and resistance prevented a push past 1.4100 against the Dollar.
The US ADP employment report saw an increase in private sector payrolls of 241,000 for March, beating forecasts and setting the fourth successive reading above 240,000. This indicates a tightening labour market and has led to expectations of the payrolls report on Friday to be firm. The March ISM non-manufacturing index decreased slightly more than expected to 58.8 from 59.5 previously with a further slight drop in the pace of new orders growth. There were, however, stronger monthly readings for employment and prices with widespread shortages in the construction sector which will tend to put upward pressure on costs.
The flash Eurozone CPI inflation rate increased to 1.4% for March from 1.1% previously which was in line with consensus expectations. The core rate held at 1.0% compared with expectations of 1.1%, although the services-sector rate increased to 1.5% from 1.3% and compared with a 1.0% rate in March 2017.
The Eurozone unemployment rate also declined to 8.5% for February from 8.6% and the lowest rate since December 2008. The data had little overall impact on European Central Bank (ECB) policy expectations as the Euro gained initial support from wider US losses as trade fears dominated the market movements.
Data to Watch:
08:15 ESP Markit Services PMI (Mar)
08:15 CHF Consumer Price Index (YoY) (Mar)
08:55 EUR Markit Services PMI (Mar)
08:55 EUR Markit PMI Composite (Mar)
09:00 EUR Markit Services PMI (Mar)
09:00 EUR Markit PMI Composite (Mar)
09:30 GBP Markit Services PMI (Mar)
13:30 USD Trade Balance (Feb)
13:30 USD Continuing Jobless Claims (Mar 23)
13:30 USD Initial Jobless Claims (Mar 30)
18:00 USD FOMC Member Bostic speech