U.S. Review
Not as Bad as It Looks
- The ISM non-manufacturing index edged down 0.4 points in March, but, at 56.5, remains firmly in expansion territory. The non-manufacturing index has held up well compared to the manufacturing index, suggesting that the headwinds from the stronger dollar and lower mining investment have had little effect on the significantly larger service sector.
- Labor market data released this week gave no indication that conditions have softened to the degree suggested by last week's payroll report. Job openings climbed to a 14-year high in February, while another low initial jobless claims print brought the four-week average to its lowest level since 2000.
Global Review
Canadian Labor Market Surprises on the Upside
- Despite a consensus expectation for no job growth, the Canadian economy added a net 28.7 thousand jobs. Granted, full-time jobs gave back some of the prior month’s gains, but this was more than offset by the net addition of 56.8 thousand part-time jobs, the strongest outturn in eight months for this category.
- This week, Australia’s Reserve Bank opted to keep its cash rate target unchanged despite some expectation for another cut.
- A near stalling of industrial production growth in the United Kingdom reflected a slowing in oil and gas output.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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