· Optimism for a U.S.-China trade deal helped the dollar hit a three-week high against the yen on Friday, although moves in broader foreign exchange markets were limited as investors saw a lot of headlines but no conclusions out of the trade talks.
Xinhua reported that Chinese President Xi Jinping had said progress was being made in trade talks with Washington and called for an early conclusion of negotiations.
U.S. President Donald Trump said on Thursday a deal could be announced in about four weeks, but warned it would be difficult to let China trade with the United States if remaining issues were not resolved.
The dollar rose to a three-week high of 111.8 yen per dollar while holding firm against most other currencies. The offshore yuan also rose 0.2 percent to 6.7065.
Against a basket of currencies the dollar was flat, however, and the European session opened with most major currencies trading in tight ranges.
· The focus for the day is U.S. labour market data due out at 1230 GMT, which will help traders decide how the U.S. economy is holding up. MUFG analysts said the market was “struggling for direction” before the jobs report.
· The euro rose slightly to 1.1228, its gains capped after data released on Thursday showed German industrial order dropped in February.
Sterling strengthened back towards $1.31 as a senior European Union source said Donald Tusk was likely to offer Britain a flexible extension of the date of the country’s exit from the bloc of up to one year.
The pound was up 0.2 percent at $1.3093.
· 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.
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.
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.
· Analysts at Goldman Sachs offer their expectations on the US labor market report due to be released later today at 1230 GMT.
Key Quotes:
“We estimate nonfarm payrolls increased 190k, unemployment rate at 3.8% and +0.3% in average hourly earnings m/m …. +3.3% y/y
“Reflects a boost from the weather of around 20k.
“We believe the trend in job growth has slowed from last year's strong pace.
Renewed declines in jobless claims and the resilience in business surveys suggest that the trend remains nicely above potential.”
· European Council President Donald Tusk has proposed allowing the U.K. a 12-month “flexible” extension to leave the European Union, the BBC reported on Friday.
Citing a senior EU source, the BBC said leaders of the political and economic bloc would need to agree to Tusk’s plan at a summit next week.
Tusk’s proposal would allow the U.K. the flexibility to leave the EU whenever British lawmakers approve and ratify a deal within the 12-month period.
At the moment, the U.K. is scheduled to leave the EU on April 12 and will be the first country to leave the bloc. However, May said Tuesday she is going to ask for another short extension, until May 22, as she seeks to find a way forward with the country’s opposition party.
· German industrial output rose by 0.7 percent in February as mild weather helped a surge in construction activity but manufacturing production dipped, giving little hope to Europe’s largest economy after a run of negative news.
Germany is suffering from trade friction and Brexit angst after narrowly avoiding recession last year. Leading economic institutes slashed their forecasts for 2019 growth on Thursday and warned a long-term upswing had come to an end.
· France’s Finance Minister Bruno Le Maire on Friday said that the future of the euro zone was at stake if the bloc’s 19 countries do not quickly agree on reforms to increase the convergence of their economies.
· Oil prices fell on Friday, with Brent slipping away from the $70 mark reached the previous day, pulled down by worries about progress in the U.S.-China trade talks.
International benchmark Brent futures dropped 15 cents, or 0.2 percent, to $69.25 a barrel by 0455 GMT, having touched $70.03 in the previous session, the highest since Nov. 12.
U.S. West Texas Intermediate (WTI) crude was down 1 cent at $62.09. The contract fell 36 cents in the previous session, having hit $62.99 on Wednesday, its highest since Nov 7.
Reference: Reuters, CNBC, FX Street
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