GBP/EUR 1.2011 (0.8324)
Friday’s Non Farm Payrolls gave us an indication that the US economy is staring to overcome the effects of the severe winter weather that up to now has been seen as the cause of the slow growth start to 2014. Non Farm figures for the previous two months had seen the creation of just 187K jobs compared to the combined 381K expected. However, Friday’s February reading was more in line with expectations with 175K new non-farm payroll jobs created, beating economist’s expectations of 151K. This news sent stocks higher, with the S&P 500 hitting new record intraday and closing highs. The significance of this report would indicate that the Fed policy makers will continue to trim the monthly bond purchases.
The jobless rate also rose to 6.7 percent from 6.6 percent as the number of people joining the workforce outnumbered the quantity of jobs available. This figure is also moving away from the Fed’s threshold for reassessing its forward guidance about raising the federal funds rate, something which had been put to Fed chairperson Janet Yellen earlier in the week. One cannot help but question whether the US has actually shaken off the severe weather effects on the back of just these Non Farm figures. We expect this week’s data will give us a better understanding as we have a number of notable releases for the US with February US Retail Sales on Thursday and the Michigan Confidence survey on Friday.
The Eurozone last week had a number of significant readings with the majority of the key PMI Manufacturing and Services data coming in above expectation. The Italian Service PMI figure is also back above the 50.0 mark leaving France the only other major nation below the mark for both Manufacturing and Services. This week however is a quieter one for the EUR, with data releases elsewhere expected to have a greater influence.
Similarly the UK had better than expected PMI Manufacturing and Services readings last week and also has a quieter calendar this week. The market will be waiting for next Wednesday’s BOE minutes from the MPC meeting, until then though we have estimated GDP figures on Tuesday and Trade Balance figures on Wednesday.