US ISM non-manufacturing index declined sharply.

US ADP data recorded an increase in private US payrolls of 145,000 for March and below expectations of around 200,000, although the February increase was revised higher to 261,000 from the original reading of 245,000.

There were notable declines in payrolls in manufacturing with sharp reductions in financial activities and business services. Regionally, there were sharp losses in the South.

There was a slowdown in wages growth with the annual increase for job stayers slowing to 6.9% from 7.2%.

The US ISM non-manufacturing index declined sharply to 51.2 for March from 55.1 the previous month and below expectations of 54.4. There was a slowdown in the rate of business activity growth and a much sharper slowdown in new orders growth while order backlogs declined. There was only a small employment increase for the month while supply-side stresses continued to ease.

There was a slowdown in prices growth with the lowest reading since July 2020 which suggested an underlying easing of inflation pressures.

The dollar did decline after the US data releases as yields dipped lower again, but the currency did show some resilience later in the session and edged back from fresh 2-month lows.

China’s Caixin PMI services index posted a strong gain to 57.8 for March from 55.0 previously and well above expectations of 54.8 with strong business confidence.

The Canadian jobs report will be released on Thursday.

Consensus forecasts are for an employment increase of around 10,000 with the unemployment rate edging higher to 5.1% from 5.0%.

The US will release the monthly employment report on Friday. Consensus forecasts are for an increase in non-farm payrolls of around 235,000 from 311,000 previously with the unemployment rate holding at 3.6%.

Wages data will be important with expectations of a 0.3% monthly increase.

The market reaction will be complicated by the fact that European markets will be closed for holidays.

The Euro held a firm tone into Wednesday’s European open but was unable to make further headway. The Euro was also unable to hold gains after the US data releases. The dollar demonstrated some resilience despite lower yields. EUR/USD drifted lower to the 1.0900 area and traded just below this level on Thursday.

Lower US yields underpinned the yen. USD/JPY dipped to lows around 130.65 before regaining some ground and trading just above 131.00.

The Swiss franc was broadly resilient amid a dip in US bond yields. EUR/CHF dipped below the 0.9900 level with a USD/CHF recovery to 0.9070.

Sterling held a firm overall tone with a tentative UK re-rating. GBP/USD settled close to 1.2450.

Commodity currencies were hampered by a net recovery in the dollar. AUD/USD did find support below 0.6700 on Wednesday but traded just below this level on Thursday. The Canadian trade surplus narrowed to C$0.4bn in February from C$1.2bn in January. USD/CAD edged higher to 1.3460 with a further advance to 1.3480 on Thursday.

Economic Calendar

13:30Unemployment Claims200K198K

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