New quarter, same market gloom as coronavirus spreads, critical US data eyed
Investors are not tricked on April Fool’s Day and are in a gloomy mood. Asian stocks and S&P futures are down at the beginning of the second quarter after the first quarter was the worst since 2008.
EUR/USD is under pressure as the death tolls in Spain and France continue rising, while infections in Italy seem to level off. Final manufacturing Purchasing Managers’ Indexes for March are projected to confirm only moderate contraction – yet this is due to a quirk in the methodology that counts delays as a positive factor. Eurozone countries remain at odds over corona-bonds. France, Italy, and Spain want a debt sharing scheme, while Germany and the Netherlands oppose it.
GBP/USD is trading below 1.24 after a volatile Tuesday, as the UK continues suffering rapid contagion. Final UK Manufacturing PMI is forecast to show a minor downgrade.
US data stand out later in the day. ADP’s private-sector jobs report is set to show a loss of around 150,000 jobs, in a precursor to the official Non-Farm Payrolls report.
Oil prices are hovering around the lows, with WTI trading at the $20 handle. Saudi Arabia and Russia are considering a meeting to discuss petrol prices after launching a price war earlier this year. Trump spoke with Russian President Vladimir Putin earlier this week.
US ADP Employment Change March Preview: The job onslaught begins
Payrolls for ADP’s clients are expected to have cut payrolls by 154,000 in March after adding 183,000 workers in February and 209,000 in January.
Initial jobless claims saw 3.283 million filings for the week of March 20 the largest on record by a factor of 4.7 and they are expected to be nearly duplicated when the subsequent week’s numbers are released by the Department of Labor on Thursday.
ADP and NFP
The chief interest of the ADP Employment Change Report is that it is a good indicator for the nationwide for the Employment Situation Report from the Bureau of Labor Statistics (BLS) which is normally issued on the Friday of the same week. In essence the ADP figures are a limited version of the NFP private payrolls figure. The main structural difference between the NFP payroll figures and those of ADP is that the BLS numbers include hiring and firing by local, state and federal governments
Conclusion and market impact
It is probably that the estimates for the ADP and by implication NFP on Friday understate the damage from the fast moving Coronavirus on the US economy. The number of state, local and business closures was far greater at month end than in the beginning and there was little anticipation in the first week how fast the situation would escalate.
After the initial claims number last week it would be hard to overstate the negative but largely priced market expectation for US job numbers. Though the risk for the ADP figure is on the downside its dollar impact is the reverse as the US currency is benefiting from its revived safety status.
According to Trading Central (3rd party RIA) the EURUSD is long positions ABOVE 1.0930 with targets at 1.1230 & 1.1350 in extension.
* Past performance is not a guarantee of future performance
|Number of Lots:||Required Margin:||Risk Management (50%):||Potential Profit/Loss 1.1230|
|1||€ 3,333.33||€ 1,666.67||€ 2,093.92|
|5||€ 16,666.67||€ 33,333.33||€ 10,469.60|
|10||€ 33,333.33||€ 66,666.67||€ 20,939.20|
|25||€ 83,333.33||€ 166,666.67||€ 52,348.00|
|50||€ 166,666.67||€ 333,333.33||€ 104,696.00|
According to Trading Central (3rd party RIA) the GBPUSD is long positions ABOVE 1.1810 with targets at 1.2745 & 1.3095 in extension.
* Past performance is not a guarantee of future performance
|Number of Lots:||Required Margin:||Risk Management (50%):||Potential Profit/Loss 1.2350|
|1||€ 3,751.22||€ 1,875.61||€ 3,596.08|
|5||€ 18,756.10||€ 37,512.19||€ 17,980.40|
|10||€ 37,512.19||€ 75,024.38||€ 35,960.80|
|25||€ 93,780.48||€ 187,560.96||€ 89,902.00|
|50||€ 187,560.96||€ 375,121.91||€ 179,804.00|
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