US jobs figures disappoint

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Friday’s Non-Farm Payrolls number defied “Good Friday” by posting a jobs gain significantly lower than consensus, once again causing analysts to reassess their expectations towards further quantitative easing in the US. 120,000 jobs were added in March, almost half what economists expected and breaking the recent trend of gains above 200k. As we told you last week, the relationship between US data and the dollar has once again switched with bad data now weakening the greenback. GBPUSD and EURUSD are both higher since Friday afternoon.

We have to remember that the Federal Reserve’s latest minutes told us that additional stimulus would be contingent on a deterioration of the gains in the labour market. Now, one swallow does not make a summer and there are reasonable arguments to explain the drop in March (weather being the most widely touted) but those analysts who had brushed their hands of additional asset purchases are going to have to go back to the drawing board.

The Bank of Japan has left policy on hold overnight although pressures to ease their monetary stance have increased in the past few months. Exporters have seen a weakening of the yen through the open of 2012 but are hoping for more and it looks like April’s meeting will see further QE from the Japanese authorities. The yen has strengthened overnight as a result.

Shares have opened in a mixed fashion this morning following some strong Chinese data. Yesterday saw inflation in China print higher than expected whilst overnight we have seen the country’s trade surplus widen to $5.35bn in March on stronger export growth. For those of you have attended our recent seminars or webinars you will know that China is our primary concern for Q2; a lot more than Asia depends on a soft landing for the world’s 3rd largest economy. There were rumours yesterday that we will see a reserve requirement ratio cut (a form of monetary policy easing) sometime this week and this has sent oil and gold higher.

Euro is slightly weaker this morning following poor French industrial production numbers and the data calendar is quiet for the rest of the session. Speeches from Fed members Fisher, Lockhart and Kocherlakota this afternoon will be closely watched for hints at further policy movements.

Indicative Rates Sell Buy
GBPEUR 1.2112 1.2139
GBPUSD 1.5853 1.5876
EURUSD 1.3074 1.3097
GBPJPY 128.73 128.97
GBPAUD 1.5403 1.5428
GBPNZD 1.9361 1.9390
GBPCAD 1.5820 1.5846
NZDUSD 0.8179 0.8200
GBPZAR 12.48 12.53
USDZAR 7.8614 7.9086
GBPPLN 5.0515 5.0796
EURJPY 106.07 106.33

Please note these rates are “interbank” rates ie they indicate where the market is currently trading and are not indicative of the rates offered are dependent on amount transacted. It is important to remember that foreign exchange rates fluctuate all the time. The rate you will receive will depend on the amount and currency you require.

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