GBP lifted by longer Brexit extension proposal; German data, US NFP eyed
Forex today cheered a better risk environment induced by the reports that the US and China reached a consensus on the trade text and renewed Brexit optimism, although markets remained slightly unnerved heading into the crucial US payrolls release due later today.
Amongst the G10 currencies, the GBP/USD pair caught a fresh bid wave and regained the 1.31 handle following the reports that the European Council President Tusk is proposing to offer a 12-month Brexit extension to the UK while fears of a Hard Brexit recede as the UK political parties strive for concerted efforts on May’s deal.
The Aussie continued its struggle to surpass the 0.7130 barrier amid mixed Asian equities and negative oil prices while the Kiwi kept its range trade intact around 0.6750 levels. The USD/JPY pair reached fresh 3-week tops at 111.80 amid firmer Treasury yields and positive US equity futures but the bulls take a breather, in response to the flat action seen around the US dollar. The EUR/USD pair stuck to the recovery gains near 1.1230 region, as markets await the German industrial figures for fresh impetus. Meanwhile, gold prices on Comex traded on the back foot below 1295 levels.
Key Focus Ahead
The main event risk this Friday remains the US non-farm payrolls data due at 1230 GMT, with 180k job additions expected in the US economy for the month of March. The data is likely to have a strong bearing on the Fed’s rate hike outlook in the coming months. At the same time, the Canadian employment data will be also reported, offering fresh impetus to the CAD traders.
Meanwhile, the EUR docket remains light, with the only German industrial production release of note that will drop in at 0600 GMT among other few minority reports later on.
When is the German industrial production and how could it affect EUR/USD?
Germany, Eurozone’s economic power-house, will publish its industrial production figures for the month of February at 0600 GMT today. A negative surprise in the German industrial figures would intensify these fears, knocking-off the EUR/USD pair to 2019 lows of 1.1177.
GBP/USD: Buyers cheer Brexit progress ahead of US employment data
Theresa May’s ability to join hands with the opposition seems to deliver soft Brexit and please the Pound buyers. The US NFP report could gain market attention as the GBP/USD pair trades between 200-day and 50-day SMA.
Non-Farm Payrolls Preview: Jobs, claims and sentiment
Non-farm payrolls are predicted to add 180,000 workers in March, following February’s 20,000. Manufacturing employment will rise by 10,000, up from 4,000 in February.
Canadian jobs preview: The bar for the C$ to rally is quite low
Canada publishes its labor market report for March on April 5th, at 12:30 GMT. The nation enjoyed a winning streak of surprisingly strong jobs reports. In February, employment rose by 55.9K and in January 66.8K, far above expectations.
U.S. job growth seen accelerating from 17-month trough
U.S. employment growth likely rebounded from a 17-month low in March as milder weather boosted activity in sectors like construction, which could further allay fears of a sharp slowdown in economic growth in the first quarter.
Worsening worker shortages and lingering effects of tighter financial market conditions at the turn of the year, however, suggest the job gains probably remained below 2018’s brisk pace.
The Labor Department’s closely watched monthly employment report on Friday would follow on the heels of fairly upbeat construction spending and factory data that led Wall Street banks to boost their growth estimates for the first quarter.
Nonfarm payrolls probably increased by 180,000 jobs last month, according to a Reuters survey of economists. Investors will also be watching to see if February’s paltry 20,000 job count, the smallest since September 2017, is revised higher.
“A number that is close to consensus and with an upward revision to February will give you some degree of comfort that while the economy is slowing, it isn’t declining rapidly,” said Dan North, chief economist at Euler Hermes North America in Baltimore.
The economy has shifted into lower gear as stimulus from the Trump administration’s $1.5 trillion tax cut package as well as increased government spending fades. A trade war between Washington and Beijing, and slowing global growth have also taken a toll on the economy, which in July will celebrate 10 years of expansion, the longest on record.
Growth forecasts for the first quarter are between a 1.4 percent and 2.1 percent annualized rate. The economy grew at a 2.2 percent rate in the fourth quarter, stepping down from the July-September quarter’s brisk 3.4 percent pace.
Fears of an abrupt economic slowdown could also be assuaged by strengthening wage growth and a low unemployment rate. Average hourly earnings are expected to have increased 0.3 percent in March after jumping 0.4 percent in February.
That would keep the annual increase in wages at 3.4 percent, the biggest gain since April 2009. Strong wage growth could boost confidence that consumer spending would accelerate and support the economy, after consumption stalled in January.
Stock Market News
Tesla Reports Lackluster Q1 Deliveries
While Tesla was working hard to ramp up production of Model 3, the EV maker faced challenges in deliveries and its total vehicle deliveries in the first quarter slumped by 31 percent from the previous quarter and were well below analyst estimates.
Tesla delivered around 63,000 vehicles in Q1, up by 110 percent compared to the first quarter of 2018, but 31 percent lower than the vehicles delivered in Q4 2018, the EV maker said in a statement.
Of the total 63,000 vehicles delivered in Q1 2019, some 50,900 were Model 3 and 12,100 were Models S and X.
“Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter. This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally,” Tesla said.
The carmaker warned that the lower-than-expected deliveries will impact its bottom line in Q1, but tried to appease the market that it ended Q1 “with sufficient cash on hand.”
“Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand,” Tesla said.
Analysts had expected Tesla’s total Q1 deliveries to be upwards of 70,000 vehicles at the very least and were quite disappointed with the delivery numbers.
“Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected,” CNBC quoted J.P. Morgan analyst Ryan Brinkman as saying in a note to clients.
The market was also disappointed, with Tesla shares sinking nearly 9 percent at 10:33 a.m. EDT.
Samsung Electronics sees lowest quarterly profit in more than two years
Samsung Electronics Co Ltd said on Friday it was heading for its lowest quarterly profit in more than two years as a glut in memory chips, slowing panel sales and rising competition in smartphones hit margins.
The South Korean tech giant said first-quarter operating profit likely slid 60 percent from a year earlier, missing market expectations and putting it on track for its weakest quarterly profit since late 2016.
Shares in Samsung rose briefly before paring gains to trade flat following the guidance, as many investors are already looking ahead to an earnings recovery on the back an improvement in chip prices in the second half of the year.
Samsung supplies memory chips and screens for its own smartphones and Apple Inc, and server chips for cloud companies such as Amazon. Its semiconductor business is the main profit driver.
“In the second half, memory chip prices will have a soft landing, so falls will slow, and the release of new iPhones later seems like a good sign for Samsung’s display and memory chips,” said Kim Yang-jae, an analyst at KTB Investment and Securities.
The world’s biggest maker of smartphones and memory chips said in a filing January-March profit was likely 6.2 trillion won ($5.5 billion), missing the 6.8 trillion won estimate from analysts according to Refinitiv SmartEstimate.
Revenue likely fell 14 percent from a year earlier to 52 trillion won. The firm will disclose detailed earnings in late April.
Samsung shares were flat as of 0120 GMT, while the broader market up 0.2 percent.
Google Search Requests for ‘Bitcoin’ Tripled During Recent Price Surge
Google searches for “Bitcoin” nearly tripled during the recent price spike, according to Google Trends data.
According to Google Trends, search requests for Bitcoin (BTC) jumped from roughly 30 to 100 following the leading cryptocurrency’s surge on the night of April 2. That night Bitcoin pushed over $4,500 for the first time this year, gaining 15 percent overnight.
The rating is compiled by algorithms, wherein “numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means there was not enough data for this term.”
Per the statistics, the largest number of requests was made in Nigeria, the Netherlands, South Africa, Austria, and Switzerland.
In the United States, the most frequent search requests for Bitcoin were in California, Washington, Nevada, New York and Colorado.
On April 3, Bitcoin crossed the $5,000 price mark for the first time since November 2018, with cryptocurrency markets on the rise for the third day in a row by that time. Speaking about a possible driver of Bitcoin’s spike, cryptocurrency analyst Tone Vays said that there is not always a trigger, arguing that it could be just speculation and that “Bitcoin is no different than any other asset.”
At the same time, some have suggested that investors changing pounds to Bitcoin ahead of Brexit — which is scheduled to happen in mid-April — could have been a possible catalyst, while others attributed the surge to algorithmic trading.
Today, the leading cryptocurrency started the day at $5,216, shortly after dipping below the $5,000 threshold. Currently, Bitcoin is trading at around $4,924, down by 5.61 percent on the day.
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