The greenback dominated headlines yesterday with both the ADP non farm payroll figure and also President Biden speaking on his economic vision for the future. The ADP figure itself disappointed forecast, printing at 517k against a forecast of 552k. Naturally this was the catalyst for USD weakness which helped GBPUSD and EURUSD stay above the 1.37 and 1.17 level respectively, unwinding some of the USD strength we had seen off the back of another rise in US bond yields earlier this week.
Last night President Biden announced a $2.25 trillion spending plan which includes significant spending on infrastructure and green initiatives, to make the US economy more competitive. However, this will be funded with tax hikes, most importantly an increase in corporation tax from 21% to 28%. Naturally, this was followed by a promise of millions of jobs which should be reflected in the weekly unemployment claims figure.
Elsewhere the pound was able to enjoy some positive news with final QoQ GDP printing at 1.3% which was greater than both the forecast and the previous figure of 1.0%. Overall, the UK economy is now estimated to have shrunk by 9.8% YoY in 2020 which is marginally lower than the previous forecast of 9.9%. Nevertheless, concerns still linger around the economic bounce-back of the UK and also households willingness to spend their additional savings once lockdowns are lifted.
The data front today is pretty thin with lower tier EUR data in the form of Spanish, Italian, French and German manufacturing PMI figures due. We also have the OPEC meeting today which can always throw out a few surprises, especially given what we experienced with oil prices around this time last year. Outside of today, the market will be looking towards the employment data date at 13.30 on Friday with the NFP figure forecast at 652k against previous of 379k.
WorldFirst dealing desks and phone lines will be closed in line with the public holidays in the days ahead and reopen on Tuesday 6th April. Our online trading platform will remain open throughout this period.
Enjoy the long weekend ahead.
Joshua Nagenthiran, Senior Relationship Manager.
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