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Central Bank Meeting Minutes in Focus for Clues on Next Policy Move -

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Apr, 03rd 11:23

Last Friday, U.S stocks advanced considerably, extending the rally to seven consecutive weeks after March Non-farm report had shown positive signals of domestically economic recovery without posing any threat of Fed to raise interest rate in April meeting.

The U.S. Department of Labor said that there were 215,000 more jobs created in the previous month, following a gain of 245,000 new workers in February and above the forecast of 210,000 by economists. Average hourly earnings, which is published at the same time, increased by 0.3 percent after unexpectedly dropped 0.1 percent in February.

After two months enjoyed the unemployment rate at eight-year lows of 4.9 percent, the percentage of U.S work force that is unemployed and actively seeking employment mildly rose to 5.0 percent. The increase was due to the fact that more Americans entered the labor market and pushed the labor force participation rate to surge to 63 percent, the highest since March 2014.

With the unemployment rate came back to the level of 5.0 percent, not to mention the speech of President Janet Yellen on Tuesday that Fed’s policy makers would have to consider slowing the pace of rate hike, this upcoming April meeting is widely expected to have no surprise. However, the U.S economy are witnessing signals of improvement as many Americans are pulled back to the workforce, underscoring a solid growth in labor sector.

Another report on Friday which was ISM Manufacturing PMI also pointed to positive. The Institute for Supply Management said that its manufacturing gauge for March expanded for the first time since October, 2015. The readings was much better than expected with 51.8 points, fuelled by the highest number of new orders since November 2014.

Next week, the market will look for ISM Non-manufacturing PMI due on Tuesday, which is forecasted to pose expansion at the level of 54.1 points, before drawing attention to the FOMC meeting minutes published a day after.

The European Central Bank is to publish the minutes of its most recent policy meeting. Later in the same day, ECB President Mario Draghi is due to speak at an event in Portugal.

On Monday, investors may eye on British Construction PMI and Eurozone Unemployment rate. Last week, Sterling was the worst performer on the back of a lower-than-anticipated manufacturing PMI report. The more important U.K. PMI Services report is scheduled for release on Tuesday, not to mention Industrial Production report due on Friday. Upbeat data may fuel a losing-momentum Pound to rise against U.S dollar.

In the last trading day next week, the Loonie will come insight as Statistics Canada will report the change in the number of employed people during March and its Unemployment Rate at 1:30 GMT. Currently, Canadian dollar has been in a mixed bag with the volatility of the crude price.

On commodity market, oil price is heading down with both the benchmarks settled down lower for two weeks in a row. Crude futures are posing sharp declines after report that Saudi Arabia will not agree to a comprehensive production freeze later this month unless Iran also pledges to cap its output. This is quite likely a notification of death to attempts of other producers in OPEC and Russia to push crude price to inch up.

Gold also plunged on Friday but closed higher last week as expectation of U.S tightening its policy has been fading so far this year. The yellow metal is sensitive to the greenback as a rise would lift the opportunity cost of holding non-yielding assets such as bullion.

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