Will the United States continue to rebound in employment?

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Will the United States continue to rebound in employment?

A drop in coronavirus cases, an acceleration in vaccinations and a further easing of lockdown restrictions are all expected to boost the monthly employment data expected on Friday.

Labor Department figures are expected to show non-farm payrolls increased by 628,000 in March after rising 379,000 in February, according to a Bloomberg survey of economists. The unemployment rate is expected to fall further to 6 percent, from 6.2 percent last month.

The return of leisure and hospitality jobs could temper wage growth in the latest report, although the overall trend points to a steady increase.

The report is one of the most closely watched among investors who sold off U.S. government debt earlier this year as they braced for higher inflation. The data is expected to be released on Good Friday, a day with a shortened trading session in the bond market and a close to the stock market.

Some economists have improved their growth prospects in 2021, boosted by the deployment of the vaccine and the passage President Joe Biden’s $ 1.9 billion stimulus package, which includes an extension of emergency unemployment assistance provided by the federal government, business loans and a third round of stimulus checks.

Nonetheless, the United States could see aggregate production return to pre-pandemic levels sooner than the labor market. Indeed, despite recent gains, the world’s largest economy is still short of 9.5 million jobs at the start of 2020.

“This is why it is so important that fiscal leverage is used,” said Oren Klachkin, an economist at Oxford Economics, “because we can really avoid unnecessarily hurting the long-term outlook if we spend a little more now on ourselves. ensure that the economy has all the necessary weapons to return to the current situation. Mamta badkar

Is the Japanese economy at a turning point?

One of the most closely watched economic data points in Japan – the Tankan survey of large manufacturers, overseen by its central bank – reached zero in the fourth quarter of 2019 and has been in negative territory ever since. But with a global economic recovery underway, some analysts in Tokyo expect it to turn positive this quarter when the latest survey is released on Wednesday.

Although similar to business outlook surveys in other countries, the Tankan has two key differences: a large sample of almost 10,000 businesses and a near total response rate of over 99%. Given its timeliness and depth, the Bank of Japan relies heavily on it to assess the state of the business cycle.

If the figure for large manufacturers exceeds zero, minus 10 in the fourth quarter of 2020, it will mark an important moment in the recovery. The index subtracts companies reporting negative trading conditions from those reporting positive.

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Takeshi Yamaguchi, chief economist at Morgan Stanley in Tokyo, predicts a further reading of 4. “This would be consistent with our own view that the impact of the latest declaration of a state of emergency on the economy should be temporary and limited, ”he said.

Economists polled by Bloomberg, however, anticipate that the Tankan will increase significantly but remain in negative territory, at minus 1.

A good reading of the Tankan could give Japanese equities a boost – the Topix index is already up nearly 10% this year – but it is unlikely to make a big difference in the short term on yields. interest, after the BoJ conducted a review of its policy this month. and decided to keep the 10-year bond yields pinned to “around zero”. Robin harding

Line graph from the Tankan Trade Conditions Survey showing an expected improvement from the survey of major Japanese manufacturers

Is the rally of the euro against the dollar over?

The divergent fortunes of Europe and the United States in their fight against the coronavirus sent the euro to a four-month low against the dollar last week, helping to push the greenback to the highest level since November against a basket of major currencies.

As the U.S. economy has been bolstered by a rapid rollout of vaccines, easing restrictions on viruses, and a huge stimulus package under the Biden administration, Europe has become bogged down in vaccine disarray, an increase in coronavirus cases and prolonged blockages.

Rising yields on US government debt, which reflects falling demand for bonds, also pushed up the dollar, long seen as a safe haven in times of financial stress.

This week, the euro faces a flurry of US economic data that could seal the end of a rally against the dollar that began last May. On Friday, the euro was trading nearly 7% stronger than the greenback compared to the same period last year, after peaking on January 6 at $ 1.2343.

The results of a consumer confidence survey on Tuesday, manufacturing results on Thursday and monthly wage data on Friday should all point to a recovery in the US economy.

Meanwhile, this week’s inflation and retail sales data for the eurozone, the latter for the German bloc power on Thursday, could exacerbate last week’s fall in the euro.

“Economic reopening [in Europe] is likely to delay the United States by several months, implying that hopes of European catching up are likely to be dashed and that the strength of the euro may well be on its last legs, ”said Seema Shah, chief strategist at Principal Global Investors. Eva szalay

Against the dollar ($ per €) line graph showing the euro collapses against the high dollar as Europe is hit by vaccine disarray
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