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The final Euro-zone PMI services-sector index declined to 26.4 from the flash reading of 28.4 and close to half the reading of 52.6 for February. The composite index registered the sharpest monthly decline on record and also marked a series low. Only the Irish index resisted a record low for the month, maintaining concerns over the near-term Euro-zone outlook and the Euro was unable to make headway ahead of the New York open. 

US non-farm payrolls declined 701,000 for March, much steeper than the expected drop of around 100,000 and following a revised 275,000 increase the previous month as the coronavirus, the outbreak had a larger than expected impact. There was a very sharp decline in employment within the leisure sector due to travel restrictions and healthcare jobs surprisingly dropped. The unemployment rate increased to 4.4% from 3.5% previously, the sharpest one-month increase since 1975, while weekly hours also declined. Given the surge in jobless claims, there are expectations that the unemployment rate could reach 10% within two months.

The dollar posted net gains despite the fragile jobs report as attractions of high liquidity and lack of attractive significant alternatives continued to support the US dollar.

The ISM non-manufacturing index declined to 53.5 for March from 57.3 the previous month as activity declined for the first time in over 10 years. Employment also fell for the month, and the headline figure was artificially supported by much longer supplier delivery times.

The Euro was unable to gain any traction late in the session and dipped to lows around 1.0775 amid dollar strength before a slight recovery.  

CFTC data recorded a further net increase in long Euro positions in the latest week to over 74,000, maintaining the risk of long liquidation. Source reports suggested that Italy was considering how to start easing restrictions from the middle of May. The dollar edged lower on Monday with the Euro recovering to the 1.0820 area.


Wider US currency gains continued to underpin the dollar against the Japanese yen on Friday. US equities lost ground while Treasuries were little changed in choppy conditions.  The dollar pushed to highs near 108.70 before fading slightly late in the session.

CFTC data recorded a small net decline in the long yen positions, but the yen will find it difficult to gain fresh traction given a lack of confidence in the Japanese outlook. According to reports, Japan is likely to declare a state of emergency on Tuesday as part of a package to curb acceleration in coronavirus cases. Risk appetite recovered amid hopes that the increase in US cases could start to ease following a more upbeat assessment by President Trump. S&P 500 futures were over 3.0% higher in early Europe, which also limited any potential yen demand and the Japanese currency lost ground on the crosses. The dollar advanced to just above 109.0 amid a wider retreat as liquidity conditions improved and commodity currencies made limited headway with a weaker yen tone in early Europe.


The final March reading for the UK PMI services-sector index declined to 34.5 from the flash reading of 35.7 and the February reading of 53.2. This data suggested that confidence had deteriorated further during the month with the cut-off for replies on March 27th. The composite index declined sharply to 36.0 from 53.0 and the weakest reading on record, reinforcing expectations of a rapid deterioration in the overall economy.  

Sterling lost ground during the day as confidence in the UK outlook deteriorated, and markets also fretted over the global outlook. The UK currency declined to lows near 1.2200 against the dollar before a correction to 1.2270 while the Euro recovered to the 0.8800 area.

CFTC data recorded a decline in long Sterling positions to just above 5,000, but there is little scope for UK currency buying. Sterling dipped lower at the Asian open following confirmation that Prime Minister Johnson had been admitted to hospital for tests after continuing to suffer coronavirus symptoms. The final GfK consumer confidence reading for March recorded a very sharp decline to -34 from -7 and Sterling remained on the defensive, although with support below 1.2250.


The Euro was unable to gain any support against the franc on Friday and settled around the 1.0560 area while the dollar strengthened to highs near 0.9800 amid wider gains. The Swiss currency was still hampered by expectations that the National Bank would continue to intervene to cap gains. There was little change in CFTC positioning with a net long franc position sustained in the last week. The franc edged lower on Monday amid a stronger tone in risk appetite with the Euro edging higher to the 1.0570 area with markets waiting for the latest sight deposits data to gauge the extent of on-going National Bank intervention.




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