Danske Research Team
Danske Bank A/S
Market Movers
Today focus will be on the US labour market report for February. We expect non-farm payrolls increased 160,000, below consensus of 195,000. Our forecast for employment growth is still faster than the trend growth in the labour force putting additional downward pressure on the unemployment rate. Key for the Fed is average hourly earnings, which have moved higher recently, and hence bolstered the Fed’s confidence in the inflation outlook. However, the latest decline in both market- and survey-based inflation expectations has spooked some at the Fed.
Over the weekend, the annual meeting of China’s National People’s Congress (NPC) starts. Here, China is set to announce its plans to revive growth and map out economic goals for the next five years. The biggest take-away from the NPC is usually the GDP target but reforms to rebalance the economy will also be in focus.
In Sweden industrial and service production for January are due for release, see Scandi Markets.
Selected Market News
Germany and France find common ground in campaigning against Brexit. France’s president Hollande warned of ‘consequences’ if the UK leaves the EU and hinted that the UK might be forced to deal with migrants in Dover instead of having controls in Calais. German finance minister Schäuble added that the UK could face trade restrictions with EU if it left, hence also trying to support the pro-EU campaign. According to one of six cabinet ministers for a Brexit, the comments reflect the EU elite teaming up with big business to try to get a vote to stay in the EU, see FT.
The oil price is trading higher this morning. According to Nigeria’s petroleum minister key members of OPEC intend to meet with non-members in Russia on 20 March to renew talks on an agreement to cap oil output. Nigeria’s petroleum minister said there will be a ‘dramatic price movement’ adding that producers generally seek a recovery in the crude price to USD50/bl. Russia has confirmed its readiness to participate in the talks but the date of the meeting is still being discussed, see Bloomberg.
European inflation markets got some support yesterday. ECB’s preferred measure for medium-term inflation expectations, the 5y5y inflation swap traded at 1.48% up from 1.38% two days earlier. There was no obvious catalyst behind the rally, but it could reflect some investors expecting aggressive easing from the ECB at the meeting next week. Ahead of the rally, levels were very depressed and inflation markets seemed somewhat decoupled from other assets, where easing from the ECB is clearly priced.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.