Currency Markets Mark Time in Asian Trade Ahead of US Jobs Report
Key Overnight Developments
• Australian Construction Slows Most in Nearly Two Years, Says AiG
• Currency Markets Mark Time in Asian Trade Ahead of US Jobs Report
The Euro and the British Pound were little changed in Asian trade, adding a modest 0.1 and 0.02 percent against the US Dollar as currency markets marked time ahead of tomorrow’s US Nonfarm Payrolls report. We remain short EURUSD at 1.4881 and GBPUSD at 1.5765.
The pace of expansion in Australia’s construction sector slowed in February according to a report from the Australia Industry Group, as an index tracking the industry fell to 52.8 from 57.7 in the previous month – the largest decline in nearly two years. The details of the report revealed slowing momentum across all sub-sectors, with apartment and commercial construction leading the way lower. New orders and employment declined for the first time in three months while prices saw the first decline since October.
The economic calendar is decidedly tame in European hours, with February’s UK Producer Price Index figures being the only item of interest on the docket. Expectations call for the annual pace of wholesale inflation to advance to 4.0 percent, the highest in 14 months. February’s quarterly inflation from the Bank of England forecast a spike in year-on-year price growth figures through the first quarter as higher oil prices and sterling depreciation feed through, and that seems to be precisely what is likely to drive this result. Indeed, the Core PPI reading that strips out volatile items like food and energy is set to print significantly lower at 2.8 percent. On balance, the outcome fits well within the underlying themes priced into exchange rates over recent weeks and so seems unlikely to stir much volatility given its limited implications for monetary policy at least until the release of the minutes from yesterday’s BOE policy meeting offers a bit more perspective next week. On balance, all eyes are likely to be transfixed on the US Nonfarm Payrolls release set to cross the wires late into the session.
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