Fundamental Comment

US Non-farm Payrolls, PMIs Under Scrutiny

US Non-farm Payrolls, PMIs Under Scrutiny

Financial markets' participants will be following important economic reports this week, the foremost of which is the jobs report from the United States, as well as the final Manufacturing and Service PMI released from a number of major economies.

It is necessary to note that indicators of manufacturing and services published by the Chinese economy are expected to be of great importance, as they will reflect the impact of the spread of the Covid-19 on the world’s second-biggest economy.

US Dollar

Certainly, the jobs report is expected to be the most important and influencing the movement of the dollar as it is considered a leading indicator used by the Federal Reserve to assess the performance of the labor market, where it will also determine the impact of the virus on US economy.

The non-farm payrolls may indicate that American employers cut 100,000 jobs in March, and the unemployment rate shot up to 4.0% from 3.5% in February, according to expectations for the expected jobs report.

The final purchasing managers’ index for both services and manufacturing sectors for the month of March will also be of interest to investors, as it may give an indication about the pace of growth in the US economy during the first quarter.

The Composite PMI may point to a contraction of to 40.5 in March, compared to February's reading of 49.6.

It should be noted that any comments from Fed members or President Donald Trump must be carefully watched, as well as the latest updates about the outbreak of the Corona virus in the United States.

Euro

The euro will likely be affected by the important data that will be released from the euro zone, as investors will focus on the manufacturing and services PMI.

The final composite PMI in the euro area may confirm the contraction in March at 31.4 from the expansion of 51.6 recorded in February.

Investors will also focus on inflation data, as the flash CPI reading in the Eurozone is expected to decline to 0.7 percent in the year to March from a previous of 1.2 percent.

Pound Sterling

This week, the UK will release its final PMI for the services, manufacturing and construction sectors for March, as these indicators will provide the latest updates on the health of the British economy in light of the spread of the Covid-19 pandemic.

Expectations refer to a collapse to 37.1 in March after growth of 53.0 in February, according to analysts' expectations for the final composite PMI that includes the three sectors. Other than this report, the pound might move according to the general market sentiment.

Commodities

Gold hit a record high last week, benefiting from the decline in the US dollar after massive government stimulus plans, but it fell at the end of last week amid profit-taking by investors.

The yellow metal this week will largely depend on the important economic data issued by the major economies, as in the event of a further deterioration, this will support expectations that the central banks will continue to reinvigorate their economies, but the latest developments of the Coronavirus may remain the main driver of the markets.

With regard to crude oil, prices dropped slightly last week, amidst optimism due to the potential benefits of stimulus efforts by policymakers around the world and pessimism about the impact of the contraction of oil demand caused by the consequences of the rapid spread of the coronavirus.

Oil price movements this week will depend on the developments of the respiratory illness, in addition to the weekly US government report tracking the change in crude stockpiles.

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