Economic Insights

Survey shows U.S. labor market in private sector remains solid

Automatic Data Processing (ADP) released February’s payroll data, showing 198,000 jobs added in the private sector from the revised 215,000 jobs increase in January. The private sector’s labor condition tends to outperform the official non-farm payroll, indicating that the budget cut and sequester have less impact on the private sector. In the previous three months (November to January), ADP increased 233k jobs on average, higher than the 200k average from the U.S. Non-Farm Payroll (NFP).

The Dollar index strengthened overnight on the strong payroll data, after the easing exit plan was put on the table since beginning of year.

Game change for European Central Bank (ECB)?

The ECB will release its benchmark refi rate in its press conference later. Once again, I do not think the ECB will lower the interest rate this round. However, the press conference is crucial, since we want to hear the monetary policy outlook in the near term from the “Yo-Yo” expert Mario Draghi.

The general economic outlook remains challenging and vulnerable. However, gradual recovery will come in H2, which was the latest script from the president. More importantly, the president ruled out a further refi rate cut two months ago. However, I do not rule out the possibility that the central bank might change the game tonight, though chances might not be high.

Euro trades turned cautious before the ECB meeting as uncertainties spurred. The Euro gained slightly in the morning after Standard & Poor’s revised Portugal’s outlook to stable from negative.

Modest growth outlook from the Beige Book

Beige Book Reports show that from the twelve Federal Reserve Districts indicated, economic activity generally expanded at a modest to moderate pace since the previous Beige Book. Five Districts reported that economic growth was moderate in January and early February, and five Districts reported that activity expanded at a modest pace.

Most Districts reported expansion in consumer spending, although retail sales slowed in several Districts. Automobile sales were strong or solid in most Districts, and tourism strengthened in a number of Districts. The demand for services was generally positive across Districts, most notably for technology and logistics firms. Transportation services activity was mixed among Districts, although the majority of contacts were optimistic about future activity. Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries.

Residential real estate markets strengthened in nearly all Districts and home prices rose amid falling inventories across much of the country.

Currency Insights

Aussie’s Pressure: Australia’s January Trade Balance Widens

Australia trade deficit increased to AUD1.057 million from the AUD688 million in the prior month. The bad deficit figure might prompt the Reserve Bank of Australia’s (RBA) attention for further warning of currency valuation or loosening monetary policy further.

The coming resistance of the AUDUSD may stand at 1.0350, and the next support may stay at 1.0140.

Previous Daily Market Report: Daily Market Report for 6 March 2013: Slightly Faster Australian 4Q Growth Led By Exports