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Sterling and Loonie Rises, Dollar Shrugs ADP and Awaits Biden

Yen remains generally weak in early US session today. But buying focuses against the Japanese currency has somewhat turned from Dollar to Sterling and Canadian. Both the Pound and Loonie were lifted slightly be better than expected GDP data. On the other hand, Dollar’s rally is losing some momentum. Traders are turning their attention to US President Joe Biden’s infrastructure plan, estimated at the scale of USD 3-4 trillion.

Technically, 152.52 resistance in GBP/JPY is in focus. Firm break there will confirm resumption of whole up trend from 123.94, for 156.59 long term resistance. CAD/JPY is also set to retest 88.06 high. Firm break there will resume larger rise from 73.80, towards corresponding resistance at 91.62.

In Europe, currently, FTSE is down -0.03%. DAX is down -0.08%. CAC is down -0.11%. Germany 10-year yield is down -0.0077 at -0.289. Earlier in Asia, Nikkei dropped -0.86%. Hong Kong HSI dropped -0.70%. China Shanghai SSE dropped -0.43%. Singapore Strait Times dropped -0.80%. Japan 10-year JGB yield rose 0.0052 to 0.098.

US ADP jobs grew 517k, strongest since last Sep

US ADP employment grew 517k in March, below expectation of 550k. By company size, small businesses added 174k jobs, medium businesses added 188k, large businesses added 155k. By sector, goods-producing jobs grew 80k, service-providing grew 437k.

“We saw marked improvement in March’s labor market data, reporting the strongest gain since September 2020,” said Nela Richardson, chief economist, ADP. “Job growth in the service sector significantly outpaced its recent monthly average, led with notable increase by the leisure and hospitality industry. This sector has the most opportunity to improve as the economy continues to gradually reopen and the vaccine is made more widely available. We are continuing to keep a close watch on the hardest hit sectors but the groundwork is being laid for a further boost in the monthly pace of hiring in the months ahead.”

Canada GDP grew 0.7% mom in Jan, expecting 0.5% mom growth in Feb

Canada GDP grew 0.7% mom in January, above expectation of 0.5% mom. That’s the ninth consecutive monthly increase. Yet, total economic activity remained about -3% below February 2020 level, before the pandemic. Good-producing industries were up 1.5% mom while services-producing industries were up 0.4% mom. 20 industrial sectors were nearly evenly split between expansions and contractions.

Preliminary information suggests an approximate 0.5% increase in real GDP for February. Retail trade, construction, and real estate and rental and leasing all contributed to the growth, while manufacturing offset some of the increase.

ECB Lagarde: We have exceptional circumstances to deal with at the moment

ECB President Christine Lagarde said in a Bloomberg TV interview, “We have exceptional circumstances to deal with at the moment and we have exceptional tools to use at the moment, and a battery of those. We will use them as and when needed in order to deliver on our mandate and deliver on our pledge to the economy.”

“Given the exceptional situation that we are facing we are using maximum flexibility” with the EUR 1.85T PEPP purchases program, she added. The March 2022 deadline of the program was not “set in stone”, and policy makers will give “sufficient early notice to avoid the anxiety, the tantrum, or any of those movements” that have happened in the past.

Overall, Lagarde said, “we have an economic situation overall which in this part of the world, Europe, is really marked by uncertainty. What monetary policy has to do and what the ECB has to do is to provide as much certainty as possible.”

Eurozone CPI jumped to 1.3% yoy in Mar, but core CPI slowed to 0.9% yoy

Eurozone CPI jumped to 1.3% yoy in March, up from 0.9% yoy, above expectation of 0.9% yoy. However, CPI core dropped to 0.9% yoy, down from 1.1% yoy, missed expectation of 1.1% yoy.

Energy is expected to have the highest annual rate in March (4.3%, compared with -1.7% in February), followed by services (1.3%, compared with 1.2% in February), food, alcohol & tobacco (1.1%, compared with 1.3% in February) and non-energy industrial goods (0.3%, compared with 1.0% in February).

France CPI jumped to 1.1% yoy in Mar, consumer spending flat in Feb

France CPI accelerated to 1.1% yoy in March, up from February’s 0.6% yoy. This increase in inflation should result from the acceleration in the service prices and from a marked rebound of those of the energy.

Consumer spending was flat in February, below expectation of 1.3% mom rise. The increase in manufactured goods purchases (+3.4%) was offset by a drop in energy expenditure (-3.1%) and food consumption (-2.2%).

UK Q4 GDP finalized at 1.3% qoq, contracted -9.8% in a 2020 as a whole

UK GDP growth was finalized 1.3% qoq in Q4, revised up from 1.0% qoq. The level of GDP was still -7.3% below it’s Q4, 2019 level, prior to the impact of the coronavirus pandemic. Over the year as a whole, GDP contracted -9.8% in 2020, slightly revised from first estimate of -9.9% decline. That is the largest annual fall in UK GDP on record.

Also released, current account deficit widened to GBP -26.3B in Q4, versus expectation of GBP -34.8B.

Japan industrial production dropped -2.1% mom in Feb, more contraction expected in Mar

Japan industrial production dropped -2.1% mom in February, worse than expectation of -1.3% mom. In addition to pandemic restrictions, production was disrupted by the 7.3-earthquake off the coast of eastern Japan on February 13.

Manufacturers surveyed by the Ministry of Economy, Trade and Industry expected output to drop another -1.9% mom in March, followed by 9.3% mom rebound in April. But the actual figure could be worse as the impact of the March 19 fire at a Renesas Electronics chip-making plant was not reflected in the forecasts yet.

China PMI manufacturing rose to 51.9, PMI non-manufacturing rose to 56.3

China official PMI Manufacturing rose to 51.9 in March, up from 50.6, ab