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  • US non-farm payrolls add fewer than expected
  • Mario Draghi speaks at press conference, takes dovish stance
  • German industrial orders come back strong
  • Canadian employment rebounds

Asian markets were mixed overnight amid mild profit-taking following a week of healthy gains as focus remained squarely on non-farm payrolls from the US.  In its announcement  on Friday, Fitch ratings confirmed China’s A+ rating with a stable outlook.  Despite fundamental credit weaknesses – low average incomes, weak scores for governance – it is balanced by China’s core sovereign credit strength and strong foreign reserves.

Moving to Europe, bourses traded in positive territory following Germany’s strong industrial orders print for the month of February at 0.6%, marketing its fourth consecutive monthly gain.  Domestic orders, in particular intermediate and capital goods, expanded at a pace of 1.2%, while foreign orders edged up 0.2%.  This certainly supports the view that gross domestic product for Europe’s largest economy will be stronger in 2014, coming in around 1.8%, than at the end of 2013 as its export oriented industry struggled to gain traction against the backdrop of a weak global economy.

The euro continues to nurse its wounds following ECB President, Mario Draghi’s dovish press conference yesterday where he spent most of his time discussing the potential of additional easing, outlining how the central bank can increase stimulus and admitting for the first time, his fear of stagnation.  Draghi was specific in saying that the ECB could either follow in the footsteps of the Federal Reserve and Bank of Japan to implement Quantitative Easing, or implement another rate cut which would bring about negative deposit rates.

Technically, to confirm the bearish momentum for EUR/USD, we would need to see a close below 1.3670.  The 1.3700 handle remains key for the pair today as there is a strike option at 1.3700 set to expire at today’s NY cut.

Across the Atlantic, the non-farm payroll report from the US missed the mark of 200,000, coming in at 192,000 and the unemployment rate remained steady at 6.7%. Dissecting the data, hiring was strongest in professional ranks and at bars and restaurants.  The only sector to lose jobs was in manufacturing which shed 1,000 jobs.  On a positive note, January and February figures were revised higher at 37,000. This has done little to confirm an interest rate hike in the second quarter of 2014

North of the border, Canada’s March employment figures rebounded after February’s surprise decline in jobs at 42,900 and the unemployment rate edged down to 6.9% from 7.0%. The robust figure from Canada has led the loonie to strengthen to trade below the 1.100 handle, after trading in a narrow 77 point five day range from 1.1001 to 1.1078.  The next level of support for USD/CAD is seen at 1.0956 and resistance is located at 1.1028.  Other domestic data to be released later this morning will be Ivey Purchasing Manager`s Index for March with consensus for a print of 59.0, an improvement from February`s reading of 57.2.

By  Cheryl Girling,  National Account Manager at  Cambridge Mercantile Group