President Trump is not pressuring Fed, but is expressing a point of view

Moore and Cain share administration view that strong growth not necessarily inflationary

No need for Fed hikes without inflation 

Top U.S.and Chinese officials will have a teleconference next week

U.S.-China talks are moving in the right direction

U.S. and China will hold a summit if good trade deal reached

More headway in China talks possible today

Statistics Canada reported on Friday that the number of employed people fell by 7,200 m-o-m in March, while economists had forecast a gain of 1,000 and after an unrevised advance of 55,900 in the previous month. That was the first drop in employment since August 2018.

Meanwhile, Canada's unemployment remained at 5.8 percent, matching economists’ forecast.

According to the report, full-time employment decreased by 6,400 in March, while part-time jobs declined by 900.

In March, the number of private sector employees fell by 17,300 (-0.1 percent m-o-m), while the number of public sector employees grew by 4,200 (+0.1 percent m-o-m). At the same time, the number of self-employed increased by 6,000 (+0.2 percent m-o-m) last month.

Sector-wise, there were more people working in the finance, insurance, real estate, rental and leasing industry (+13,300), and in public administration (+9,600). At the same time, employment declined in health care and social assistance (-20,000), in business, building and other support services (-14,300), and in accommodation and food services (-13,4000).

On a year-over-year basis, employment rose by 332,000 (or 1.8 percent), with gains in both full- (+204,000) and part-time (+128,000) work. 

U.S. stock-index traded rose on Friday, supported by stronger-than-expected U.S. employment data for March and the latest developments in the U.S.-China trade talks.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

McDonald's (MCD) target raised to $210 at Telsey Advisory Group

Intel (INTC) downgraded to Market Perform from Outperform at Wells Fargo

The U.S. Labor Department announced on Friday that nonfarm payrolls increased by 196,000 in March after an upwardly revised 33,000 gain in the prior month (originally an increase of 20,000). 

According to the report, employment rose notably in health care (+49,000 jobs) and in professional and technical services (+34,000). 

At the same time, the unemployment rate remained at 3.8 percent in March.

Economists had forecast 180,000 new jobs and the jobless rate to stay at 3.8 percent. 

The labor force participation rate edged up to 63.0 percent in March from 62.9 percent in February, while hourly earnings for private-sector workers rose 0.1 percent m-o-m (4 cents) to $27.70, following an unrevised 0.4 percent m-o-m gain in February. Economists had forecast a 0.3 percent m-o-m advance in the average hourly earnings. Over the year, average hourly earnings have increased 3.2 percent. 

The average workweek increased by 0.1 hour to 34.5 hours in March, matching economists’ forecast.

Nick Kounis, head of financial markets research at ABN AMRO, says ECB account of the March Governing Council meeting suggested that the central bank still maintains a cautious stance in reacting to the slowdown.

• “This reflects the Governing Council’s ‘confidence … that the conditions for a rebound in activity and inflation remained in place to support a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term’.”
• “Although there was some officials calling for a longer extension of the forward guidance on interest rates (to March 2020), the majority opted for a shorter extension (to the end of this year) as ‘a data-driven gradualist approach was seen as most appropriate’.”
• “In addition, the maturity of the TLTRO-III also suggested a conservative reaction. The Governing Council noted that ‘a shorter horizon would provide a stronger signal to banks that they needed to be prepared to secure funding on private markets and avoid becoming overly reliant on central bank funding’.”
• “The ECB was trying to strike a balance between alleviating a re-funding cliff and pushing banks gradually away from reliance on ECB liquidity.”

"Our government will not call into question the eurozone or the EU, and I am speaking on behalf of everyone", Italy's Deputy Prime Minister Luigi Di Maio said at a conference in Milan on Friday.

Analysts at Rabobank note the ECB has already given away more policy changes than they had expected in March, so they do not expect new policy decisions to be added in April.

• “We believe that risks to the ECB’s policy remain skewed towards additional easing.”
• “Last week, discussions about a potential tiered deposit rate system suddenly appeared, but we don’t expect this to be implemented in the near future.”
• “Instead, it could make a relatively more generous TLTRO-III pricing the path of the least resistance if there is division in the Council.”

• We continue to focus on something we can put to EU

Analysts at TD Securities note that Germany's industrial production rose 0.7 percent m/m in February, better than forecast, but details were mixed.

• "Manufacturing fell 0.2% m/m, while construction surged 6.8%. Most other components registered declines on the month. German IP has been dragged lower in recent months by slowing demand from Asia (trade war, Chinese New Year) and slower growth in Turkey.”

• It is important UK PM May asks for extension but recognizes Britain would have to prepare for the EU elections
• Must be prepared for all Brexit outcomes

ECB policymaker Francois Villeroy de Galhau said that lower capital requirements for European subsidiaries of EU banks would help encourage the emergence of more cross-border banks.

ECB officials have long called for cross-border consolidation among European banks, which they believe would help credit flow to countries needing it most, making their monetary policy more potent.

"We will not achieve an effective and profitable Banking Union without cross-border consolidation in Europe: there are still too many roadblocks and not enough cross-border restructuring," Villeroy said.

According to analysts at TD Securities, next week's meeting comes sandwiched between two important ECB meetings, and as such, is unlikely to provide much in terms of steps forward.

“After announcing new TLTROs in March, we expect the ECB to defer announcing details until June. The Governing Council likely wants time to observe any potential rebound in euro area growth before committing to the details ahead of the September launch. They have time on their side, and on that front, we remain cautiously optimistic. “Macroeconomic data has started to turn a corner since March, with data surprises on hard data and surveys now in positive territory, while inflation surprises continue to linger around zero. The ECB will not provide updated forecasts but recent data is likely to colour their tone.”

If the United Kingdom leaves the EU without a deal it could have "very significant" costs for some parts of the British economy, Roberto Azevedo, Director-General of the World Trade Organisation (WTO), said.

Azevedo said that economists were best placed to estimate the potential impact of a no-deal Brexit, which would leave the British economy trading on WTO rules.

"But I would say there will be costs, and the costs may be very significant in some sectors, and maybe less significant in other sectors. But overall, there will be an impact, we all know that," he told.

British unit labour costs rose by an annual 3.1 percent in the last three months of 2018, the fastest increase in five years, official data showed on Friday.

The Office for National Statistics also said output-per-hour, a measure of productivity, rose by only 0.5 percent in 2018 as a whole, "well below the annual average of 2 percent experienced before the 2008 economic downturn."

Analysts at TD Securities are looking for the Canadian employment levels to remain unchanged in March as firms hit pause after hiring over 100k workers over the first two months of 2019.

“Given the inherent volatility of the labour force survey, it is difficult to rule out further gains but we would note that the current 6m trend for job growth (48k per month, 29k full time) is entirely at odds with broader conditions in the Canadian economy. Unchanged employment should see the unemployment rate tick higher to 5.9% barring any unforeseen change to labour force participation while wage growth should hold at 2.2% y/y. Hours worked will also come under scrutiny after three consecutive declines that have seen total labour input fall into negative territory on a year-ago basis for the first time in two years.”

• Rumours about possible extension are 'clumsy leaks'

• EU27 countries had given clear condition for extension: a credible alternative plan

• "We're not there yet" on Brexit alternative plan

• UK needs to provide a clear plan by next Tuesday

• Says if any deal is ratified before this date, period should be terminated early

• Says UK will make preparations to hold European elections

Italian National Institute of Statistics (Istat) said that risks related to the international economy outlook remain to the downside, considering the ongoing trade conflicts between China and the United States, the uncertain outcome of Brexit and the generalised slowdown of the World trade.

• Chinese economy, one of the main drivers of global growth, is showing signals of deceleration.

• In January, according to CPB data, the merchandise World trade in volume increased by 2.3% (-2.1% in December) but global leading indicators still point downwards.

• In Italy, the industrial production index is back on a positive pattern as well as the industrial orders.

• February data confirmed a substantial stability of the Italian labour market conditions and unemployment increased only marginally.

• The euro area inflation decelerated but the inflation differential in favor of Italy is confirmed.

• Consumers and manufacturing firms confidence deteriorated further. The leading indicator continued to decrease although at a decelerating pace showing that Italian economy perspectives are uncertain.

The European Union economics commissioner Pierre Moscovici said that Italy's economic situation was "delicate" and needed to be monitored closely.

Moscovici cited non-EU figures pointing to no growth or even recession for Italy. "These are figures that we need to follow very closely," he said.

He added the Commission will issue new economic forecasts on May 7. In its latest estimates released in February, the Commission predicted a 0.2% growth for Italy this year. He said that the new EU forecasts will acknowledge the current economic slowdown that is most affecting Germany and Italy in the 19-country eurozone.

According to the report from Halifax Bank of Scotland, house prices in the three months to March were 3.2% higher than in the same three months a year earlier. Economists had expected a 2.3% increase.

• In the latest quarter (January to March) house prices were 1.6% higher than in the preceding three months (October to December)

• On a monthly basis, house prices fell by 1.6%

• The average house price is now £233,181

“The average UK house price is now £233,181 following a 1.6% monthly fall in March. This reduction partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures. Industry-wide figures show that the number of mortgages being approved remains around 40% below prefinancial crisis levels, and we know that lower levels of activity can lead to bigger price movements.” Russell Galley, Managing Director, Halifax, said:

NAB Research discusses NZD/USD outlook and maintains a neutral bias in the near-term, but looks to higher ranger over the coming months. NAB sees NZD/USD around 0.67 in the near-term, and close t0 0.70 by year-end.

"The NZD continues to track within the 0.6650-0.6950 trading range it has been stuck in since early November, owing to conflicting forces. We expect more of the same as debate about the global economic outlook rages on. As market participants debate the economic outlook, a tug of war on the NZD is operating, allowing the NZD to track sideways in a fairly narrow range. Until there is more clarity on the outlook, this state of affairs is expected to continue. As the year progresses, we see more positive influences on the NZD prevailing and a higher trading range emerging," NAB adds.

According to the report from Ministry for the Economy and Finance, iIn February, the deficit fell by 0.2 billion euros to 4.0 billion euros after 4.2 billion euros in January, in a context of slight increase in trade. Thus, the moderate growth of exports (+0.4 billion) exceeds that of imports (+0.2 billion). The exceptional shipments and shipments and the partial rebound in sales of refined petroleum products contributed to the rise in exports, but were offset by a sharp drop in aeronautical deliveries. On the import side, higher pharmaceutical purchases are offset by lower energy supplies.

In February, the deficit shrank by $ 0.2 billion to $ 4.0 billion. Exports rebounded after the decline in January (+0.9% after -1.1%) while imports rose slightly after being stable (+0.4% after 0.0% in January).

Analysts at Danske Bank point out that today, the US jobs report for March is due out and will be the key economic release for today’s session.

“The US labour market looks strong on most parameters and the weak increase in nonfarm payrolls in February was most likely a fluke after the big increase in January. We expect nonfarm payrolls rose 190,000 in March and that average hourly earnings rose +0.25% m/m, implying a fall in the annual growth rate to 3.3% y/y from 3.4% y/y. If we are right, the jobs report should support markets, which have rallied this week based on renewed growth optimism, as the US is not about to fall into recession just yet.”

According to provisional data of the Federal Statistical Office (Destatis), in February 2019, production in industry was up 0.7% on the previous month on a price, seasonally and calendar adjusted basis. Economists had expected a 0.5% increase. The revision of the provisional data for January 2019 resulted in a change rate of 0.0% compared with December 2018 (provisional value: -0.8%).

In February 2019, production in industry excluding energy and construction was down 0.2% month on month. Within industry, the production of capital goods increased by 0.6%, while the production of intermediate goods decreased by 0.6% and of consumer goods by 1.6%. Outside industry, energy production was down 3.1% and the production in construction up 6.8% in February 2019 month on month.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1329 (878)

$1.1310 (2131)

$1.1292 (303)

Price at time of writing this review: $1.1227

Support levels (open interest**, contracts):

$1.1199 (4294)

$1.1150 (5464)

$1.1100 (1565)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date April, 5 is 81243 contracts (according to data from April, 4) with the maximum number of contracts with strike price $1,1150 (5464);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3254 (844)

$1.3209 (2001)

$1.3171 (716)

Price at time of writing this review: $1.3114

Support levels (open interest**, contracts):

$1.3067 (1360)

$1.3035 (855)

$1.2994 (1506)

Comments:

- Overall open interest on the CALL options with the expiration date April, 5 is 24542 contracts, with the maximum number of contracts with strike price $1,3400 (4223);

- Overall open interest on the PUT options with the expiration date April, 5 is 33437 contracts, with the maximum number of contracts with strike price $1,2500 (5046);

- The ratio of PUT/CALL was 1.36 versus 1.34 from the previous trading day according to data from April, 4

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.