USA unemployment numbers came in below expectations, In the week ending March 29, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 16,000 from the previous week’s revised figure of 310,000. With NFP numbers being printed on Friday traders would be advised to trade with extreme caution as the print has the capacity to surprise.
The ISM report came in 1.5% points higher than February whilst the services PMI for the USA came in ahead of expectations with a reading of 55.3 in March (55.5 flash), up from 53.3 in February.
Other than the poor unemployment data there was other poor data published from the USA in the form of its trade balance/balance of payments. The gap widened by 7.7 percent to $42.3 billion, the biggest since September, from the prior month’s $39.3 billion.
The euro fell to the lowest value in a month against the dollar after European Central Bank President Mario Draghi strengthened his pledge that policy makers were ready to take further steps to counter any risk of deflation.
March 2014 Non-Manufacturing ISM Report On Business
Economic activity in the non-manufacturing sector grew in March for the 50th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®. The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee. “The NMI® registered 53.1 percent in March, 1.5 percentage points higher than February’s reading of 51.6 percent. The Non-Manufacturing Business Activity Index decreased to 53.4 percent, which is 1.2 percentage points lower than the reading of 54.6 percent reported previously.
Markit U.S. Services PMI–final data
March data pointed to a further increase in business activity across the U.S. service sector, and the rate of expansion accelerated from the snow-related four-month low seen during February. However, job creation remained only modest in March, partly reflecting a moderation in new business growth to its weakest for a year-and-a-half. At 55.3 in March (55.5 flash), up from 53.3 in February, the Markit U.S. Services PMI Business Activity Index signalled a marked acceleration in service sector output growth following disruptions to business activity amid adverse weather conditions in the previous month.
Trade Deficit in U.S. Unexpectedly Widens as Exports Fall
The trade deficit in the U.S. unexpectedly widened in February to the highest level in five months as exports of fuels and capital equipment dropped. The gap widened by 7.7 percent to $42.3 billion, the biggest since September, from the prior month’s $39.3 billion, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey of 69 economists called for a reduction to $38.5 billion. Imports were little changed. The deterioration in trade will further depress economic growth in the first quarter, which was already suffering from a slowdowns in consumer spending and manufacturing caused by unusual weather.
US Unemployment Insurance Weekly Claims Report
In the week ending March 29, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 16,000 from the previous week’s revised figure of 310,000. The 4-week moving average was 319,500, an increase of 250 from the previous week’s revised average of 319,250. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending March 22, an increase of 0.1 percentage point from the prior week’s revised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 22 was 2,836,000, an increase of 22,000 from the preceding week’s revised level.
Market overview at 10:00 am UK time
The DJIA closed flat, the SPX down 0.11%, the NASDAQ down 0.91%. In Europe the euro STOXX closed up 0.61%, CAC up 0.42%, DAX up 0.06% and the UK FTSE down 0.15%. The DJIA equity index future is up 0.11%, SPX future up 0.04% the NASDAQ future is down 0.71%. Euro STOXX future is up 0.38%, DAX future down 0.07%, CAC future up 0.58%, FTSE future down 0.05%.
NYMEX WTI oil closed up 0.76% at $100.38 NYMEX nat gas was up 1.60% at $4.43 per therm, COMEX gold is down 0.31% at $1286.80 per ounce with silver down 1.20% at $19.81 per ounce.
The euro dropped 0.4 percent to $1.3719 late afternoon in New York after declining 0.2 percent yesterday. It touched $1.3698, the least since Feb. 28th. The common currency fell 0.3 percent to 142.56 yen after strengthening 1.9 percent during the previous four days. The dollar was little changed at 103.92 yen. The euro fell to the lowest in a month against the dollar after European Central Bank President Mario Draghi strengthened his pledge that policy makers were ready to take further steps to counter any risk of deflation.
Sterling dropped 0.2 percent to $1.6598 and rose 0.2 percent to 82.66 pence per euro. The pound weakened for a third day against the dollar as Markit Economics said its U.K. services purchasing managers’ index declined to 57.6 from 58.2 in February. The median estimate in a Bloomberg survey was for it to be unchanged. A reading above 50 indicates growth.
The pound has rallied 11 percent in the past year, the best performer after the pound of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro has gained 7.9 percent and the dollar has added 0.4 percent, while the yen has tumbled 11 percent.
The U.S. 10-year yield fell two basis points, or 0.02 percentage point, to 2.79 percent mid-afternoon in New York. The 2.75 percent note due February 2024 rose 1/8, or $1.25 per $1,000 face amount, to 99 21/32. The yield reached 2.82 percent on March 7th, the highest since Jan. 23rd. Treasuries rose, pushing 10-year yields down from almost the highest levels since January, amid speculation that a report tomorrow forecast to show faster U.S. employment growth drove the market down.
Fundamental policy events and high impact news events
Friday sees the Halifax HPI published for the UK expected to come in at 0.7% for the month. Germany’s factory orders are expected in at 0.5% up for the month, employment change in Canada is expected to come in up 25.3K on the month with the unemployment rate at 7%. From the USA non-farm employment data is expected to print at 196K with the unemployment rate predicted to come in at 6.6%.