Weekly Market Review - April 1-5
Euro has been the biggest gainer so far, adding 0.12% against the US dollar for the week. The European currency rose 0.85% against Japanese yen and 0.53% against the Swiss franc. EUR/GBP has been quite volatile, but ends the week relatively at the same level, up 0.06%.
The market is still keeping an eye on the Brexit talks and trying to anticipate the next moves of the UK Parliament and Prime Minister Theresa May, who request a delay to June 30.
Here are some macroeconomic indicators that have moved the prices this week:
Japan Manufacturing PMI Contracted in March
Manufacturing activity in Japan declined at a slower pace last month compared to February, but production demonstrated the biggest decline in about three years, according to a private business survey published on April 1. The manufacturing purchasing managers’ index (PMI) in March was 49.2, slightly up from February’s 48.9. The third largest economy in the world is negatively impacted by the China-US trade war, as it deals with weaker domestic and foreign demand.
Australia Business Confidences Falls to Lowest Level in 6 Years
Australian business confidence index declined to the lowest level in about six years in March, hinting to weaker economic growth. The index fell to 0 last month from 2 in February, according to the National Australia Bank (not to be confused with the Reserve Bank of Australia, which is the central bank). Confidence declined across the majority of sectors, with mining showing improvement while manufacturing staying unchanged.
China’s Manufacturing Rebounds in March
Manufacturing activity in China defied expectations and rebounded last month, according to a report by Caixin/Markit. Thus, the manufacturing purchasing managers’ index (PMI) hit 50.8 in March, which exceeded analysts’ average forecasts at 49.9 and putting an end to three months in a row of declines. The report of the private sector survey was published after the Sunday report released by the National Bureau of Statistics, according to which the official PMI rose to 50.5 in March from 49.2 in February.
UK Manufacturing Surges to 13-Month Highs
UK’s manufacturing activity took economists by surprise after research firm IHS Markit published its manufacturing purchasing managers’ index (PMI) report, according to which the PMI rose to 55.1 last month, the highest level in 13 months. Analysts note an increased manufacturing activity as businesses intensify their preparations for possible disruptions caused by Brexit, which was officially scheduled for March 29, 2019, but was delayed to let the UK parliament decide the best deal.
Eurozone Inflation Slows in March
Last month, eurozone’s inflation index slightly fell and continued to stay far from the European Central Bank’s target at 2%. The consumer price index (CPI) published by Eurostat fell last month to 1.4% in annual terms, from 1.5% recorded in February. Core CPI, which excludes prices of foods, alcohol, and tobacco, fell to 0.8% in March from February’s revised 1%. Disappointed inflation data comes amid increasing wages and low unemployment.
US Nonfarm Payrolls Indicator Unexpectedly Increases
The US nonfarm payrolls increased more than expected in March, which eases the pressure after several disappointing reports. Thus, the US economy created 196,000 jobs last month, above the average forecasts at 175,000. The unemployment rate remained unchanged at 3.8%, in line with analysts’ expectations. Soon after the report was published, US futures reacted with short-term gains, with S&P 500 adding 0.4%.
Upcoming News to Watch
Next week, Germany will report on its imports, exports, and trade balance. Also in Europe, Switzerland will release its unemployment rate level, which will have a significant impact on the CHF performance. On Wednesday, Italy and the UK will report on industrial production. The latter will also release its GDP growth.
Germany and France will release their inflation changes in annual and monthly terms on Thursday, the same day when the US will report on its production price index.
Brexit will continue to be in the spotlight, with the British pound likely to react to any changes in sentiment.
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