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Germany recorded an unemployment decline of 18,000 for March after a 33,000 decline previously and a slightly smaller decline than expected while the Euro-zone unemployment rate edged lower to 6.8% from a revised 6.9% previously. Confidence in the Euro-zone outlook remained fragile.

ECB chief economist Lane stated that policy settings should be adjusted if inflation expectations become de-anchored and added that it is especially important to be data-dependent. The French CPI inflation rate increased to 4.5% for March from 3.6% and the Euro-zone data will be watched closely on Friday. Consensus forecasts are for an increase to a record high of 6.6%, but with concerns that the rate could be at least 7.0%.

There was still an important element of uncertainty over Russian demands that gas supplies to ‘unfriendly countries’ should be paid for in Roubles. In comments on Thursday, Russian President Putin stated that supplies would be cut off to customers that did not comply with new regulations, although it appears that customers will not have to source the roubles themselves which should allow supplies to continue, but tensions will be high.

The Euro overall was unable to make further headway during the day and gradually lost ground during the day with a dip below the 1.1100 level against the dollar.

The US currency did lose ground into the London fix amid month-end selling with the Euro jumping to highs just above 1.1130, but it failed to hold the gains.

The Euro retreated to around 1.1060 against the dollar on Friday as US yields moved higher ahead of the US employment report with strong gains in payrolls expected.




The dollar dipped sharply after Thursday’s European open with a slide to lows around 121.35 amid last-minute capital repatriation. There was, however, a sharp recovery back above 122.0 ahead of the New York open as overall volatility remained high.

Initial jobless claims edged higher to 202,000 in the latest week from a revised 188,000 previously and slightly below consensus forecasts while continuing clams declined to 1.31mn from 1.34mn. The core PCE prices index increased 0.4% for February which was in line with expectations while the year-on-year increase of 5.4% from 5.2% previously was marginally below consensus forecasts of 5.5%.

The Chicago PMI manufacturing index strengthened to 62.9 for March from 56.3 previously and well above consensus forecasts.

The data overall failed to provide dollar support with a net retreat as the yen posted gains on the crosses and the US currency dipped into the London fix.

Japan’s Tankan manufacturing index retreated to 14 for the latest quarter from 18 with no change for the non-manufacturing index.

China’s Caixin PMI manufacturing index dipped to 48.1 for March from 50.4 previously and there were further concerns over the impact of coronavirus lockdowns as Shanghai introduced further restrictions. Higher yields boosted the dollar in Asia with the US currency strengthening to above 122.50 before a correction to 122.30.




Nationwide reported an increase in house prices of 14.3% in the year to March from 12.6% previously and the strongest annual reading since 2004. There was also an upward revision to the fourth-quarter GDP estimate to 1.3% from 1.0% and the current account deficit was lower than expected at £7.3bn. Overall confidence in the UK economic outlook remained very fragile amid fears over the impact of a surge in energy costs which will stifle Bank of England rate expectations.

Investment banks remained generally cautious over the Sterling outlook. There was, however, an element of month-end Sterling demand and expectations of seasonal gains during April also provided an element of support with investors looking to front-run a potential advance.

Sterling was able to hold above 1.3100 against the dollar and traded around 1.3140 at the European close while the Euro declined sharply to near 0.8430.

There was little net change on Friday as global factors dominated with Sterling around 1.3125 against the dollar.




The Swiss franc posted notable gains on Thursday with a more defensive risk tone a significant factor during the day. The Swiss currency also gained net support from expectations that medium-term inflation differentials would allow franc gains in nominal terms even if there were no gains in real terms which would help underpin competitiveness. The Euro declined sharply to lows near 1.0210 while the dollar also registered net losses to lows just below 0.9200.

Higher global yields curbed the potential for further franc support on Friday with the US currency securing a net advance to 0.9235.  


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