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US jobs data once again stole the show last week.
A new week brings the latest instalment of central banker Springwatch. As markets look to see who will emerge from their interest rate burrows first, there is a distinct focus on inflation and employment, two themes that dictate much of monetary policy.
The European Central Bank (ECB) will have been thrilled to see headline inflation fall across the eurozone to 2.4% in March. That is at least until they realised this would ramp up expectations on them to cut interest rates. The forecast for Thursday’s decision is a hold, but policymakers will likely face a barrage of questions on timings once more, and their responses could have an impact on the euro.
We’re starting a feel a little like Bill Murray in Groundhog Day. It’s been central banks this and jobs data that for months on end, and last week did little to change that. In fact, focus on the US market sharpened with private sector and non-farm payrolls pointing to yet more growth.
Friday’s non-farm payrolls were particularly significant given the scale of the growth. The US economy added 303k new jobs in March, beating last month’s 270k and far higher than the expected 200k. When your economy adds that many new jobs in one month, it doesn’t exactly signal imminent rate cuts.
Markets made a similar conclusion. Sterling’s gains over the US dollar were wiped out on Friday, while the dollar also made headway against the euro. GBP/EUR meanwhile finished the week around 0.4% down from where it began.
Here’s what to look out for this week…
German balance of trade figures are probably the most impactful figures from a quiet first part of the week.
Wednesday is a very US-centric day, with core and headline inflation arriving in the afternoon as well as the keenly debated FOMC minutes in the evening.
The ECB then delivers their interest rate decision on Thursday and Christine Lagarde and co will face off with the assembled media.
UK GDP for February is the big event on Friday, although we’ll also get the University of Michigan’s preliminary consumer sentiment survey for April.
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GBP: Growth barometer
The UK economy returned to growth in January having previously dipped into a technical recession. This week’s GDP data for February provides another chance to prove it has turned a corner, although growth is by no means assured.
GBP/USD: the past year
EUR: Another feisty one?
It’s not often you see a central banker press conference get heated, but that was the case at the ECB’s last meeting as policymakers tried to assert their independence form the Fed. We’re expecting a return to something more civilised, but questions are certainly mounting around interest rates.
GBP/EUR: the past year
USD: Falling unemployment
Friday’s focus was on non-farm payrolls, but an equally significant data point was US unemployment. Joblessness fell from 3.9% to 3.8% in March, which suggested elevated interest rates were doing little to control the exuberance of American companies.
EUR/USD: the past year
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