Euro unemployment fails to budge from highs. Market primed for today's ADP report
02/Απρ/2014 • Currency Updates•
Sterling was caught slipping across the board yesterday. London closed with the pound diving against both the euro and dollar. Losses stemmed from Manufacturing PMI coming in worse than expected. It appears Britain’s factory floors are quieter than first thought, the slowdown throws a spanner in the domino run of positive data releases for the UK. UK bulls will surely hope this gets corrected.
Growth in British manufacturing eased to its slowest pace in 8 months in March. PMI scuttled in at 55.3, below all forecasts. On the flip side its worth noting that the pace of hiring hit a 33-month high in February and this only dipped slightly in March. Ultimately of late the UK data has been so good that slight slips are inevitable and its important to focus on the wider view. The majority in the market have been bullish on UK growth prospects for some time, demonstrated by the hot money that continues to tip into the UK.
Right now the market cares more over what the BoE thinks, this latest reading gives scant reason to alter its loose policy stance- with last months vote unanimous on leaving policy unchanged this looks unlikely to change anytime soon.
Nationwide house price data this morning showed an overall uptick of 0.4% for February and a annual increase of 9.5% Construction PMI for March is set for release at 9.30 GMT.
The euro continues to misbehave. Unemployment in the eurozone has stayed close to record highs, despite wider signs the currency’s blocs recovery is starting to cement – the jobless rate remains at 11.9% This poor news follows Monday’s inflation shocker and doubtless will be playing on the minds of the ECB prior to Thursdays meeting. Although the number out of work declined 35,000 – 19M remain looking for jobs and plenty more are stuck in part time positions and keen for full time work.
The employment data also illustrated the disparity between the individual eurozone economies. German unemployment is at a post unification low, whilst in Italy the jobless rate remains at a record highs of 13%. The difference helps explain why as a whole the eurozone is still uncapable of posting even 1% growth. Necks will surely crane for Thursdays ECB meeting with the market microscope searching for clues on any likely ECB response.
Data of note today – GDP and PPI.
The dollar took leverage from poor UK manufacturing PMI to gain on Sterling and flip some of the pounds previous gains. The dollar lost ground to the euro which continues to trade at high levels. Presently most seem unwilling to enter weighty positions prior to Fridays Non-Farm Payroll.
US stocks have been flying all week and yesterday the S&P 500 closed at record highs. The stock rally was fuelled by positive data on factory growth, indicating economic growth was gaining momentum after facing difficulties from the terrible weather. The Redbook index saw a slight dip, however we saw increased consumer spending and vehicle sales indicate a improving economy with the public more willing to splash dollars.
Attention today will mostly focus on the ADP report – the street is calling a big number, this should set the scene for a strong Non-Farm Payroll.
Other data today includes- ISM NY index, mortgage applications and factory orders.