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US non-farm payrolls increased 916,000 for March, well above consensus expectations of a 650,000 increase, and the February increase was revised higher to 468,000 from the original figure of 379,000. There were solid gains across most sectors and a rebound in government jobs for the month.

Unemployment declined to a 12-month low of 6.0% from 6.2% previously and in line with market expectations. Most European markets were closed and there was a partial US holiday which curbed market reaction and the dollar gained only slight further support.

CFTC data recorded a decline in long, non-commercial Euro positions to a 12-month low, limiting the scope for further selling.

The US PMI services-sector index was revised to 60.4 for March from the flash release of 60.0 with the fastest increase in incoming business for over 5 years 

The ISM services-sector index strengthened sharply to a record high of 63.7 for March from 55.3 previously and well above consensus forecasts of 58.3. There were also very strong increases in the rate of production and orders growth with both figures posting record monthly highs. Employment increased at a faster pace for the month while the rate of price increases also accelerated. The data maintained strong underlying confidence in the US outlook.

Overall confidence in the Euro-zone outlook remained fragile, especially with France entering a 4-week national lockdown, although expectations of a faster vaccination rate provided some relief. Despite Euro-zone concerns and notably strong US data, the dollar lost ground on Monday with a retreat to 2-week lows and the Euro moved above 1.1800. Trading volumes will recover on Tuesday and the Euro held just above 1.1800 as the dollar failed to secure renewed traction.


The dollar was unable to gain more than limited backing from Friday’s stronger than expected US employment report and was capped below the 111.00.

CFTC data recorded a further increase in short yen positions to the highest level for 2 years, limiting the scope for further yen selling and increasing the correction risk.

Treasury Secretary Yellen warned against any premature tightening of global fiscal policy and there were strong expectations of further US support with the Senate again ruling that reconciliation can be used to approve legislation. Wall Street equities remained strong with the S&P 500 index posting fresh record highs which provided an element of US dollar support. US yields, however, again failed to gain any sustained traction despite the stronger than expected data releases. Overall, the dollar dipped sharply to test the 110.00 level amid a wider retreat before a correction.

China’s Caixin PMI services index strengthened to 54.3 for March from 51.5 previously with net gains for employment. There were, however, also reports that China had asked banks to reduce credit supply which dampened expectations surrounding the outlook and risk appetite was slightly more cautious.

US yields edged lower on Tuesday and S&P 500 equity futures also posted slight losses which limited yen selling and the dollar settled around 110.20.



Sterling was held in narrow ranges ahead of the holiday weekend with little in the way of fresh incentives and London markets closed on Friday. There was support close to 1.3800 against the US dollar. CFTC data registered a net increase in long Sterling positions for the first time in four weeks which indicated slid sentiment.

UK Prime Minister Johnson confirmed that the planned easing of coronavirus restrictions would go ahead on April 12, including the re-opening of non-essential retail. Underlying confidence in the UK recovery continued to provide net Sterling support. Chancellor Sunak also announced a new government-backed loan scheme to help companies recover. The UK currency also gained net support from the advance in global equities with FTSE 100 futures posting solid gains. There were gains to just above 1.3900 against the dollar while the Euro continued to test the key 0.8500 support area, although volumes remain low. Sterling traded just above 1.3900 against the dollar on Tuesday with the Euro just below the 0.8500 level and continuing to test support levels as UK markets re-opened.



The Swiss franc posted net gains on Monday despite optimism over the global economy and the advance in equity markets. The yen was also resilient during the day which provided net franc support as global risk conditions remained under close scrutiny.

Overall, the Euro edged lower to 1.1060 while the dollar retreated sharply to lows near 0.9350 amid wider losses. A retreat in US yields limited franc selling, although there was slightly greater confidence surrounding European vaccine developments. The Euro traded around 1.1070 on Tuesday with the dollar around 0.9370.



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