US NFP grows 303k in Mar, unemployment rate ticks down to 3.8%

US non-farm payroll employment grew 303k in March, well above expectation of 205k. That’s also much higher than the average monthly gains of 231k over the prior 12 months.

Unemployment rate ticked down from 3.9% to 3.8%, below expectation of 3.9%. Participation rate rose from 62.5% to 62.7%.

Average hourly earnings rose 0.3% mom, matched expectations. Over the past 12 months, average hourly earnings have increased by 4.1 yoy.

Eurozone retail sales falls -0.5% mom in Feb, EU down -0.4% mom

Eurozone retail sales volume fell -0.5% mom in February, worse than expectation of -0.3% mom. Volume of retail trade decreased for food, drinks, tobacco by -0.4% mom, non-food products (except automotive fuel) by -0.2% mom, automotive fuel in specialised stores by -1.4% mom.

EU retail sales fell volume -0.4% mom. Among Member States for which data are available, the largest monthly decreases in the total retail trade volume were recorded in Germany (-1.9%), Belgium (-1.8%) and Cyprus (-1.1%). The highest increases were observed in Poland (+1.4%), Croatia (+1.2%) and Estonia (+1.0%).

BoJ’s Ueda: Excessive Yen weakness could prompt monetary policy response

In an interview with The Asahi Shimbun newspaper, BoJ Governor Kazuo Ueda highlighted extended Yen weakness could prompt further rate hikes by the central bank.

“If exchange rate trends have an effect on the cycle between wages and prices that cannot be ignored, that would become a reason for responding to the situation through monetary policy,” he explained.

Ueda also outlined other conditions under which BoJ might consider additional rate hikes, after the landmark shift in March which exited negative interest rates.

The decision to end negative interest rates was made with a certain level of confidence, quantified by Ueda as “75 percent.” He indicated that an increase in this confidence level to “80 percent or 85 percent” could prompt further adjustments

Governor also touched on factors likely to boost personal consumption, including the government’s planned income tax cut in June, expected wage increases, and a slowdown in consumer price inflation. These developments, if they materialize as anticipated, could pave the way for a higher interest rate as early as between summer to autumn.

Moreover, Ueda acknowledged the impact of a “excessively weak yen” on Japan’s economy and consumer prices, suggesting that significant currency weakness could influence future decisions regarding interest rate hikes.

Week ahead: US CPI to hog the limelight

The US inflation data, the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday, are likely to stand in a relatively quiet week ahead.

US inflation and the European Central Bank

The macroeconomic calendar will feature the US March Consumer Price Index (CPI) this week. The country will also publish the Producer Price Index (PPI), which will complete the inflationary picture for March.

In the Old Continent, the European Central Bank (ECB) monetary policy decision stands out. President Christine Lagarde and her policymakers’ colleagues have been paving the way for a June hike, at the point market players are speculating whether the ECB will act before the Fed. The ECB is expected to keep interest rates unchanged again in April while preparing markets for a reduction in a couple of months.

Other than that, the calendar will include the preliminary estimate of the US April Michigan Consumer Sentiment Index and German Industrial Production and the final estimate of the Harmonized Index of Consumer Prices (HICP).

Besides, the Minutes of the March Fed meeting, the UK monthly Gross Domestic Product (GDP) report for February and the US preliminary Michigan Consumer Sentiment and Inflation Expectations data will provide fresh trading impetus to GBP/USD.

Also of note will remain the speeches from Fed policymakers for gauging the timing and scope of the Fed interest rate cuts this year.