Trading with point and figure

** PLEASE NOTE: There will be no updates from me next week, **
** and updates will resume gradually from Tuesday 18 April **

- US airstrike in Syria may well steal usual Payrolls' thunder; Trump-Xi
meeting also in focus; busy run of Trade and Production data in Eurozone
and UK, Canada Unemployment, Brazil and Mexico inflation also due;
Carney speech and EU Finance Ministers and Central bank governors
also meet with focus on Greece

- US Payrolls: whisper above consensus following ADP, but other factors
point to downside risks, underlying trend still robust

- German and French production divergence underlines rise in French PMIs
paced by hopes of post-election pick-up

- Charts: Steel Rebar, Iron Ore and Coking Coal futures

..........................................................................

********************
** EVENTS PREVIEW **
********************

It being the first Friday of the month, the focal point for financial markets would normally be the US labour report. But its influence on market price action may well be reduced in the wake of the 'one off' US airstrikes in Syria, in addition to other political considerations, such as the Trump-Xi meeting, and news flow related to progress (or lack thereof) on US Tax and health care reforms, and infrastructure spending plans. Ahead of the US labour report, there are also a raft of Industrial Production and Trade data from Germany, France and the UK, while the afternoon also brings Canadian Unemployment along with consumer inflation readings in Brazil and Mexico. Some attention will also need to be given to the relatively sharp price falls seen on China's commodity exchanges, with coal, rebar, iron ore tumbling any where between 4% and 7%, which is certainly not the largest falls that have been registered, but may signal a degree of weariness in the Trump-flation rally in industrial raw materials. There is also an informal meeting of EU finance ministers and central bank heads, where progress on a deal with Greece is expected, and speeches by BoE governor Carney and NY Fed governor Dudley, as markets look ahead to the upcoming two week Easter holiday related lull in trading activity. The Production and Trade data from France and Germany showed a very sharp divergence, with German Production posting a second consecutive 2.2% m/m rise against forecasts of -0.2%, while Exports continued to evidence strength with a 0.8% m/m rise after rebounding 2.4% m/m in January, with Imports seeing a drop of -1.6%, which looks to be more of a reactive correction to January's +2.8% m/m. By contrast, French Production signally failed to match the recent pick-up in sector surveys, posting a very disappointing -0.6% m/m in Manufacturing Output after falling 0.9% m/m in January, which suggests that the better surveys reflecting hopes for a post-election upturn, rather than a material improvement in current order flows. This was also echoed in a very disappointing set of Trade data which saw a much wider than expected EUR -6.6 Bln deficit following on from a much wider -8.06 Bln in January. The equivalent UK readings are forecast to show a rather modest 0.3% m/m rebound in Manufacturing Output after the unexpected and somewhat quirky -0.9% m/m fall in January, while the Trade deficit is seen little changed at a very large £-10.9 Bln, with erratic seasonal patterns at this time of the year heightening the risk of an outlier and/or a hefty revision.

** U.S.A. - March Labour data **
- The consensus forecast for Payrolls has been nudged higher to 180K after the much higher than expected 263K ADP Employment print, notwithstanding the -53K revision to February, which also pointed to strength in the primary job creation sector, i.e. SMEs as well as considerable strength in good producing employment, which fits well with the strength seen in sector surveys and Durable Goods Orders. However other anecdotal pointers are skewed to the downside. Firstly the warm weather related boost of around 50K to the 235K gain in February due to seasonal adjustment turns into a 50K deduction in March, which also saw unseasonably cold weather. Initial Claims also jumped to 261K in the establishment survey week, and such sharp changes quite often a reliable pointer to risks for Payrolls. As is also well known, the ADP measure can often diverge quite sharply with Payrolls, and March is one of the months where there have been quite large misses (60 to 100K) in the past 5 years, notwithstanding last year's modest 6K miss. However perspective is required whatever the outcome, given that the breakeven rate of Payrolls growth is around 80K to 100K, even a surprise 120K would still (depending on revisions) equate to monthly average Payrolls growth for Q1 of 197K, which would be stronger than in H2 2016. Be that as it may, the other components are expected to see the Unemployment Rate unchanged at 4.7%, and there will also be plenty of attention given to the Underemployment Rate that dipped back to its post-GFC low of 9.2% in February, and the Participation Rate which has been creeping higher, though at 63.0% it remains very low by any historical standard. The Average Work Week is seen steady at 34.4, while Average Hourly Earnings are as ever forecast to post a 0.2% m/m rise, which would imply a modest dip in the y/y rate to 2.7%, which on the one hand is hardly screaming at the Fed to be more aggressive in removing accommodation, but on the other hand is notably higher than the average 2.1% pace which prevailed between 2011 and 2015.

from Marc Ostwald
 
Intraday trades sofar

2rnv6gy.jpg
 
Time to go shopping, spend some of my pips from this mornings profits. Ikea here I come, again!!!
 
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