Risk aversion was a key theme in yesterday’s markets as trade wars continued to dominate headlines in all major media outlets. President Trump took to his favoured outlet, Twitter, indicating that the US and China are not in a trade war and that the war was lost many years ago by the incompetence of previous administrations. Trump’s economic adviser, Larry Kudlow, said that the two sides were negotiating and that proposed tariffs may not take effect with markets rebounding on the back of this softer stance.
Private payrolls in the US grew by 241k in March, well ahead of the consensus figure of 205k. As a precursor to Friday’s Non-Farm Payroll figure, the reading indicates that the US Labour Market is in a healthy position to support greater levels of economic growth with the potential for increased consumer spending.
This morning an expectation of weak Eurozone data pushed the single currency to a 10-day low against the Dollar. German Services PMI fell to 53.9 from February’s figure of 55.3, indicating that business activity rose at the slowest rate in 7 months for the region’s largest economy. Both Services and Composite PMI for the Eurozone missed target by a small margin, providing no boost to the Euro. Additionally, Sterling edged lower against the Euro and Dollar as Services PMI slowed to its lowest levels in over a year and a half. The weak data can be attributed partly to the disruptive weather conditions throughout the previous month, a rise in operating expenses and Brexit-related uncertainty. Policymakers will be looking for a strong reading next month in support of a May interest rate hike.