Market movers today
The key market focus today is on the US military strike in Syria and the US non-farm payroll report from March due to be released in the US.
The US labour market has been in good shape over the past two months and we expect this trend to cont inue. We estimate a total of 160,000 new jobs were created in March but highlight that risks are skewed to the upside as the ADP labour report from Wednesday suggested weather condit ions had less of a negat ive effect on job growth than we have pencilled in. We est imate the average hourly earnings increased 0.2% m/m, which would mean an increase of 2.7% y/y. We furthermore est imate the unemployment rate remained at 4.7% aft er last mont h’s decrease.
In the UK, the NIESR GDP est imate for March is due – the indicator is usually a good predictor of actual GDP growth.
German industrial production is due to be released on Friday. Following the weak factory orders in January, we estimate indust rial product ion for February will show a drop of 2.5%.
In the Scandis, focus will be on indust rial product ion in Norway and Denmark.
Selected market news
The US has launched a military strike in Syria after accusing Assad’s regime of the gas at tack earlier this week that killed many civilians. Donald Trump confirmed the at tacks from his Florida Club – current ly the locat ion of the Chinese President Jinping’s visit – stat ing that it is in t he ‘vital national security interest of the United States to prevent and deter the spread and use of deadly chemical weapons’. The attack targeted the air base from which the gas at tack presumably originated. Prior to the at tack, Russian officials stated that at tacks would have ‘negat ive consequences’.
Safe havens such as US Treasuries, JPY and CHF have rallied on the first military act ion of the young Trump presidency. Also, gold and oil are moving higher this morning on the back of the rise in geopolit ical risk, as the at tacks suggest a different approach from the Trump administ rat ion than that under Obama.
Yesterday, the Czech National Bank (CNB) abandoned the EUR/CZK floor in an ext raordinary monetary policy meet ing, as the condit ions for a sustainable fulfilment of the inflation target were met and there is no need to keep monetary condit ions as relaxed as before anymore, according to the CNB . The exchange rate is now free to move according to supply and demand in the market (‘managed float ‘). The CNB also confirmed it stands ready to mit igate any excessive exchange rate fluctuations, without ment ioning any specific levels. Governor Jiří Rusnok indicated at the later press conference that t he CNB’s tolerance for volatility will be quite large.
