Non-Farm Payrolls - Weekly Report 31/3 – 4/4 2014

We begin with Monday the 31st of March, and the first key event of the trading week comes at 9:00am with the release of Eurostat’s inflation estimate for the Eurozone. Forecasts of around 0.7% are still some way short of Mario Draghi’s inflation target of 2%, with slow economic growth in the 18-nation currency bloc cited by the European Central Bank chiefs as the cause. If inflation continues to stagnate, Mario Draghi could make good on his threat to introduce negative interest rates to force banks to lend to would-be consumers. While this action is likely to prompt a short-term decline in the euro versus its U.S. counterpart, long-term we may see the euro actually rise in value as the currency is gradually pulled out of circulation.

On Tuesday the focus switches to the U.K. for the 8:30am release of Manufacturing PMI figures for March. A survey conducted by CBI Industrial Trends last month showed that the U.K. manufacturing sector remains resilient with 29% of surveyed manufacturers reporting above-average orders for the first quarter of 2014. So be on the lookout for a rise in U.K. purchasing manager sentiment on Tuesday that could lead to opportunities on Sterling and the FTSE100 index.

Wednesday’s key event is the week’s first piece of tradable data from the U.S., and provides an advance insight into the NFP number on Friday. That’s ADP Non-Farm Employment Change at 12:15 in the afternoon. And again, while the ADP estimate rarely tallies with Friday’s number, it *is* a very reliable indicator as to the potential *strength* of Non-Farm Payrolls – A strong ADP number on Wednesday generally translates into good news for the dollar on Friday, and vice versa.

The highlight of a busy trading day on Thursday comes at 12:30 in the afternoon with the simultaneous release of Trade Balance figures for the U.S. and Canada. The last three months have seen the U.S. exhibit a growing reliance on imported goods, while Canada’s imports and exports approached equilibrium. A continuation of this trend on Thursday is likely to open up a tradable opportunity on the U.S. and Canadian dollar pair immediately following the release.

And so to Friday the 4th of April and the all-important Non-Farm Payrolls report scheduled for release at 12:30pm. With strong U.S. durable goods data last Wednesday supporting expectations of a recovery in the world’s largest economy, a repeat of last month’s strong NFP should open up PUT opportunities on the euro-dollar.