Positioning Ahead of ECB and NFPs

Economic Data

- (IE) Ireland Mar Live Register Monthly Change: -1.8K v -2.3K prior; Unemployment Rate: 11.8% (4-year low) v 11.9% prior; Live Register Level: 396.9 v 398.7 prior
- (ZA) South Africa Q1 BER Consumer Confidence: -6 v -7 prior
- (US) MBA Mortgage Applications w/e Mar 28th: -1.2% v -3.5% prior
- (BR) Brazil Feb Industrial Production M/M: 0.4% v 0.5%e; Y/Y: 5.0% v 4.9%e
- (US) Mar ADP Employment Change: +191K v +195Ke
- (SG) Singapore Mar Purchasing Managers Index: 50.8 v 51.1e; Electronics Sector Index: 51.6 v 51.6e
- (US) Mar ISM New York: 52.0 v 57.0 prior
- (US) Feb Factory Orders: 1.6% v +1.2%e
- (US) Feb Durable Goods Orders unrevised at +2.2% to %; Durables Ex-Transportation revised lower from +0.2% to 0.1%
- (DK) Denmark Mar Foreign Reserves (DKK): 459B v 460.2Be
- (US) DOE Crude: -2.38M v +1Me; Gasoline: -1.57M v -1Me; Distillate: +550M v -0.5e

- US and European equities have been very choppy this morning as traders try to position ahead of the ECB decision tomorrow and the big US jobs report on Friday. As of writing, the DJIA is up 0.17%, the S&P500 is up 0.06% and the Nasdaq is up 0.15%.

- The March ADP employment report was solid at +191K after a couple of months of weather-related sluggishness and there was a 33K net revision to the prior month's report. Weather conditions improved markedly last month, and while the market consensus for Friday's NFPs is around +200K, some analysts are hoping for a greater snapback from the sluggishness in Jan and Feb, like was seen in yesterday's auto sales figures. Note that the benchmark 10-year yield is up another 4 basis points after the ADP data.

- Speculation continues ahead of Thursday's ECB meeting. Press reports out overnight suggested that there would be an intense debate about the ECB's inflation outlook although there was clear consensus about whether concrete policy actions would be forthcoming. According to one source, the March inflation data came as a real surprise for the ECB. EUR/USD continues to hover around the 1.38 handle. USD/JPY was edging toward the 104 area as investors were looking for carry opportunities.

- Yesterday spot gold fell to a seven-week low around $1,277 as equities rallied, Fed interest rate expectations moved up and geopolitical tensions around Ukraine eased further. This morning the yellow metal bounced higher around 08:00, and has gained nearly 1% as of writing to trade around $1,292, with traders citing short covering.

- Monsanto met expectations in its second quarter report and reiterated guidance. The firm complained about FX impacts but overall expects a strong second half of the fiscal year, punctuated by a strong conclusion in its fourth quarter. Note that potash name Agrium said its first quarter EPS would be flat, well below consensus expectations. AGU is down about 2%, while shares MON are about flat.

- Osisko Mining Corp. reached a deal to sell a 50% stake of its mining and exploration assets to Yamana Gold in a stock-and-cash deal valued at $929.6 million. The gold miner, which has been fighting a hostile takeover attempt by Goldcorp, said it has also signed a deal with the CPP Investment Board for an increase under its existing credit facility. Shares of Osisko are up 9.3%, while other small gold names are up 4-5%.

Looking Ahead

- (BR) Brazil Central Bank (BDB) Interest Rate Decision: Expected to raise Selic Target Rate by 25bps to 11.00% (**Note: decision likely after NY markets close)
- 11:00 (EU) IMF's Lagarde on global economy in Washington DC
- 11:00 (US) Fed to purchase $2.0-2.5B in bonds
- 12:30 (US) Fed's Lockhart speaks on Economy in Miami
- 16:00 (US) Fed's Bullard to meet with reporters in St. Louis
- 20:30 (AU) Australia Feb Retail Sales M/M: 0.3%e v 1.2% prior
- 20:30 (AU) Australia Feb Trade Balance: A$0.8Be v A$1.4B prior
- 21:00 (CN) China Mar Non-manufacturing PMI: No est v 55.0 prior
- 21:45 (CN) China Mar HSBC Services PMI: No est v 51.0 prior; Composite PMI: No est v 49.8 prior
- 22:00 (AU) RBA Governor Stevens addresses Business Lunch in Brisbane