Daily Market Digest: UK Jobs, Japan exports, and Oil

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Jobs Reports

UK jobs report highlights slowing pace. Japan’s exports fall as analysts question what the BoJ might do next week. Oil prices retreat as Kuwait oil workers call off strike and Russia talks of boosting production.

Today’s Economic events

  • Japan trade balance 0.28 trillion vs. 0.45 trillion
  • Australia MI leading index m/m -0.10% vs. -0.20%
  • Eurozone German PPI m/m 0.0% vs. 0.20%
  • UK Average Earnings Index 3m/y 1.80% vs. 2.10%
  • UK claimant count change 6.7k vs. -11.9k
  • UK unemployment rate 5.10%
  • Swiss ZEW economic expectations 11.5 vs. 2.5 previously
  • Canada wholesale sales m/m -2.20% vs. -0.40%

Coming Up

  • The US existing home sales
  • Weekly crude oil inventories
  • BoC Governor Poloz speech

Number of unemployed rises in Britain

Official data from the UK’s Office for National Statistics released today showed that the number of unemployment in Britain increased while wage growth remained largely flat. The subdued growth in both jobs and wages continues to paint a grim picture for the UK’s economy and is even more critical considering that the UK’s fate hangs in the balance on its upcoming referendum on UK’s membership in the EU, due on June 23rd. Data from the ONS showed that the UK’s unemployment rate was unchanged at 5.10% but claimant count change which is a measure of people receiving out of work benefits grew by 6.7k in March, posting the first increase since August 2015. Average waves including bonuses fell from 2.10% in January to 1.80% while excluding bonuses; the average earnings remained at 2.20%. Nick Palmer, a statistician for the ONS, echoed the BoE’s views that the labor market in the UK was perhaps showing signs of cooling down.

It’s too soon to be certain, but with unemployment up for the first time since mid-2015 – and employment seeing its slowest rise since that period – it’s possible that recent improvements in the labor market may be easing off.” ~ ONS statistician, Nick Palmer

GBPUSD posted a 13-day high yesterday, reaching $1.4399 and is currently trading at $1.439, close to session highs.


Japan continues to struggle as exports fall

Japan’s trade balance data released earlier today by the Ministry of Finance showed that exports fell 6.80% in March against expectations of a 7.80% declines. Meanwhile imports fell sharply, -14.90% on the year. Despite the weak data, the March trade surplus was at 755 billion yen, slightly below estimates of 883.3 billion yen. Japan’s economy continues to struggle as exporters battle the rapid appreciation of the yen which has made exports less competitive than before. While the BoJ and other officials have come out openly warning against speculative bets on the yen, Japan comes under pressure both domestically and internationally for intervening too much on the currency’s exchange rate. The Bank of Japan is due to meet next week, and the big question is whether policy makers will surprise with another additional round of easing. Local law makers are also adding to the pressure as the BoJ Governor, Haruhiko Kuroda repeatedly denied that he wasn’t considering the so-called “Helicopter Money.”

Governor, I have seen you change your heart just before [policy meetings]. I’d like to continue to discuss this matter with you from here on~ Japan opposition lawmaker Hodaka Maruyama to BoJ Governor


Oil retreats as Kuwait oil workers call off strike

It seems that the oil story would take a backseat after last Sunday’s failed Doha talks. But oil was back in the headlines as crude oil prices retreated yesterday. This came after Kuwait oil workers ended their three-day strike which had seriously affected oil production. Earlier today the crude oil futures for May delivery at the New York Mercantile Exchange traded at $40 a barrel, down by 2.30%, while the Brent crude oil futures for June delivery from the ICE futures slipped $.173 to trade at $40.39 a barrel. Kuwait represents OPEC’s fourth-largest oil producing nation. Besides the Kuwait news, reports emerged that Russia would boost oil production after the unsuccessful Doha meeting. According to deputy energy minister Kirill Molodstov speaking at the National Oil and Gas Forum in Moscow, daily output in 2016 could grow by 100,000 barrels to 10.81 million.

Maxim Nechaev, director for Russia at IHS Inc. says that Russia could boost output even with lower oil prices.

“Irrespective of whether the oil price is $45 to $50 per barrel or goes even lower to $35 per barrel, we’ll probably see an even more significant output increase this year than last year” ~ Maxim Nechaev, director for Russia at HIS Inc.


Institutional Call of the day – EUR/SEK, Swedbank*

Swedbank recommends investors to look for potential dips in EURSEK and buy. The comments come ahead of the Swedish Riksbank monetary policy meeting due on Thursday. However, it would remain a closely contested call as March inflation in Sweden exceeded analyst expectations, rising 0.80% in the month, up from 0.40% previously. Rate strategies, Paer Magnusson, says “the strategically smart move by the Riksbank would be to extend quantitative easing, or surprise by some other measure than expands monetary policy further.

EURSEK (9.155) is down 0.24% for the day, trading close to late December 2015 lows.


* Institutional Call of the day is not a recommendation or an endorsement by Orbex.com to buy or sell

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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