Weekly Market Outlook: U.S. Payrolls and Manufacturing Data

This week marks the start of the second quarter of the year. Data over the week will cover the economic performance among the major economies for the first quarter of the year and for the month of February. Investors will be closely watching the data points for clues on how the economies have fared during the second month of the year.

The main highlights of the week will be the U.S. payrolls report for the month of March. After a disappointing print for February, the March payroll numbers will gain in importance. A continued decline in the pace of jobs added could be a major cause for concern. Investors will remain cautious this week into Friday’s jobs report.

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Elsewhere, the Reserve Bank of Australia will be holding its monetary policy meeting this week. No changes are expected to the interest rates. However, in light of the recent RBNZ’s meeting which showed a dovish forward guidance, focus increases on the RBA on whether it will be able to maintain the status quo.

Manufacturing reports will remain a major theme this week. Various measures of the manufacturing activity covering some of the major economies will be coming out. The data will likely show whether global trade activity has increased.

The week starts off with Japan’s Tankan manufacturing and non-manufacturing surveys. Manufacturing activity has been subdued over the previous few quarters, while non-manufacturing activity has managed to post modest expansion.

Manufacturing activity from the Eurozone and the U.S. will also be coming up over the week as investors look to see if there has been an improvement, especially from the Eurozone.

Here’s a quick recap of what’s to come in the currency markets this week.

Reserve Bank of Australia to Stay on the Sidelines

The Reserve Bank of Australia will be holding its monetary policy meeting this week on Tuesday. The central bank is expected to leave interest rates unchanged at this week’s meeting at 1.50%. This would mark no change from the central bank in its monetary policy decision.

Investors will be looking to the monetary policy statement from the RBA about the forward guidance. This comes as the RBNZ had recently shifted to a dovish stance surprisingly. But the chances of the RBA turning negative is unlikely in the near term.

Besides the RBA’s monetary policy meeting, economic data over the week will cover the annual budget release as well as the retail sales report. Australia’s retail sales slumped in the previous months, before posting a modest recovery. Investors will be looking to the data to speculate on how this could impact the GDP report for the first quarter which will be released in a few weeks time.

The RBA is therefore expected to remain on the sidelines at this week’s meeting as it waits for further incoming data before deciding on its monetary policy course. Trade balance figures will follow on the same day as the retail sales report on Wednesday. This comes a day after the RBA’s meeting.

U.S. Payrolls and Manufacturing Data on Tap This Week

With the U.S. Federal Reserve recently signaling that there won’t be any further rate hikes for the remainder of this year, investors shift focus to the March payrolls report that will come out later in the week. The U.S labor market has remained a key cornerstone of the U.S. economic growth story.

However, in February, payrolls disappointed by a strong margin leaving investors cautious. A repeat of this, meaning a weaker pace of payroll growth will potentially dent the sentiment in the U.S. economy even further. At the moment, the U.S. economy looks to be somewhat in a balance although growth is widely expected to slow.

Besides the payrolls report, other reports over the week include the ISM’s manufacturing PMI and the ADP payrolls which will be coming out earlier in the week. The ADP payrolls could likely signal how the U.S. labor market has fared in the private sector.

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