It is Non-farm Payrolls Friday and the markets are taking a pause for breath. However this pause may be just as much related to a rather volatile afternoon yesterday with Mario Draghi’s ECB press conference. Despite upward revisions on Eurozone growth the inflation projections suggested that perhaps ECB QE could be continued beyond the current 18 month programme. Cue sharp euro weakness and sharp gains on equities. With the DAX storming into new high ground, even the FTSE 100 managed an all-time closing high as the London market was dragged up by the bootstraps in a further day of under performance.
However the usual action in the European morning of Non-farm Payrolls is that markets become rather subdued with traders unwilling to take too much of a view ahead of such crucial data. The US markets were only slightly higher yesterday with the S&P 500 closing up 0.1%, although Asian markets were showing gains with the Nikkei closing just over a percent higher on a weaker yen. The European session is consolidating in early trade. The expectation is that Non-farm Payrolls will fall slightly to 240,000 from last month’s 257,000. This is set to drag the unemployment lower to 5.6%, whilst keen eyes will also be trained on the average hourly earnings growth which is forecast at +0.2% on the month. There are risks of surprises either way, but February was a month of adverse weather conditions in the US and with some of the data still disappointing to the downside, this could put pressure on payrolls.
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