It’s been a night of consolidation in the main as markets await the arrival of key data over the next 24 hours with Super Friday’s deluge. The Aussie and the Kiwi have not made new highs, the AUD/USD consolidating in the higher 0.76s having traded overnight north of 0.77 again but unable (as yet anyway) to soldier on even further.  The NZD has also been testing higher levels overnight, and sits back down at just over 0.69 in early trade this morning, having tested above 0.6950.  That’s the tone of how the market may well trade into tonight’s payrolls and US ISM Manufacturing releases, though today’s official Chinese manufacturing and non-manufacturing PMIs will be a key signpost along the way as far as the Aussie is concerned.

The overnight session has not been marked by release of key data, though the Eurozone core CPI for February popped up to the dizzy heights of 1.0% from 0.8% and a little ahead of the 0.9% expectation.  In the hour or two after its release, the EUR/USD tracked up to and tested 1.14, before consolidating just below the figure, where it sits in early trade this morning. Likewise, a modest upward revision to UK December quarter GDP provided an excuse to buy sterling as it pushed above 1.44, also before consolidating.

US equity markets have been flat-lining into the start of the first quarter reporting season with markets braced from more fallout from low oil prices among energy-related stocks as well as the impact of the (then) stronger USD.  Outlook statements will of course be key with some measure of stability of late in oil prices and the USD pulling back from its highs in early February.  US bond markets remained bid overnight with the US 2y Treasury yield giving up 3½ bps and the 10s down 5 bps in yield.

The Fed’s Evans (a non-voter this year) has been speaking, saying the US economy is probably the strongest in the world right now, news wires picking up a line that an improving outlook could warrant faster rate hikes, a big contrast to Yellen’s early week speech.  Evans sees one rate hike in the middle of the year and one at year end.

Super Friday

First up this morning is Fed Vice Chair Dudley speaking at 8.00 AEDT.  Any comments he has on the economic or policy outlook will definitely be taken to heart by the market.  Then there is some local AU data, though not compelling from a market sensitive viewpoint with the AiG Manufacturing PMI for March and the monthly house price report from CoreLogic RP Data that will reveal something close to a rise of around 0.2% we expect after last month’s 0.5% increase.

Then the focus will be on the BoJ’s Q1 Tankan report and what it says about the condition of Japan’s business sector and outlook given the volatility in the yen this year.  That’s at 10.50 AEDT.

The Chinese official PMIs are at midday with the market looking for some improvement after last month’s weaker than expected 49.0 outcome, an increase to 49.4 expected.  (There is no consensus for the non-manufacturing PMI that was 52.7 in Feb.)  The Caixin manufacturing PMI set for release at 12.45 is also expected to tick up, to 49.3 from 48.0.

Tonight, the market will be on the lookout for any revision to the preliminary Euro PMIs, then the UK version ahead the big double with US payrolls and the US ISM Manufacturing report; the UoM Consumer Sentiment survey is also due. US payrolls will continue to demand global attention with the Fed on the lookout for whether the global risks that spooked the FOMC in March have affected the labour market. (Weekly jobless claims suggest not; overnight claims coming in at a still low 276K). The market is looking for headline payrolls growth of 205K and an unemployment rate of 4.9% with the Manufacturing ISM expected to poke tis head back above 50 at 51.0, up from 49.5.

Overnight

On global stock markets, the S&P 500 was -0.20%. Bond markets saw US 10-years -5.07bp to 1.77%. On commodity markets, Brent crude oil +0.87% to $40.14, gold+0.4% to $1,234, iron ore -0.8% to $53.75. AUD is at 0.7666 and the range was 0.7635 to 0.7723.

Good luck.

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• Markets Today:  1 April 2016 (PDF, 1MB)

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