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US Nonfarm Payrolls are reported this week, showing if the US job market is gaining momentum or struggling to leave the doldrums. Elsewhere, a clash of the titans is gearing up in OPEC, and the RBA is set to make its latest rate statement, with no major change expected. 

Reserve Bank of Australia makes rate statement 

Australia, like New Zealand, had one of the best Covid responses out there. Economically, while by no means perfect, down under looks stronger than other nations reeling in Covid’s wake. 

What’s on the agenda at the Reserve Bank of Australia’s (RBA) next rate announcement? Yields are rising globally, so is the RBA prepping a rate hike? Possibly, but while the Aussie economy recovered faster than others, hikes still seem a long way away. It’ll be a good idea to watch its next moves carefully. 

At its January statement, the RBA kept its three-year bond and cash rate targets at 0.1%. It also reaffirmed its commitment to not raise actual inflation until it is in the 2-3% target range. 

Major banks do not see a wild change in RBA policy in March. ING, Westpac, TDS and ANZ all predict no changes, with Australia likely to stay on its current economic course. 

The RBA has also pledge to increase its bond-buying programme up to A$100 billion ($76.4 billion) from mid-April to help support jobs and boost inflation. But the Conservative government has also said it is doing away with its JobKeeper payments, fortnightly payments worth A$1,000 (US$775), as the economy is performing above expectation. That has caused a little consternation amongst furloughed Aussies, like those in the aviation industry, but could be a sign that the Australian economy is healthier than many of its contemporaries. 

US nonfarm payrolls released 

Observers will be looking very carefully at this Friday’s US Nonfarm Payroll data as it will give some indicators about the apparent strength or weakness of the US labour market. 

January saw 49,000 jobs added to the US economy after December’s loss of 227,000. Growth sure, but way below the +100,000 expected.  

The wider January Job Report highlights the difficult position US labour is in right now.  

Leisure and hospitality continues to take body blows, with 61,000 sector workers losing their jobs in January. The sector has shed 4 million jobs since February 2019, showing the massive damage Covid has done. But if people can’t go out and enjoy themselves, it’s only going to continue. It’s a sad story, but one that will only end once the US returns to normality. Retail payrolls dropped by 37,800 after gaining 134,900 in December. 

But some areas of the job market are improving. Notably, professional and business services added nearly 100,000 jobs after adding back 156,000 in December. And wholesale trade payrolls rose by more than 14,000 after a rise of 15,500 in December. Private payrolls too have shot up, according to ADP’s monthly jobs report, rising 174,000 in January. 

January also saw a slight fall in the US unemployment rate, from 6.7% to 6.3%. 

So, mixed emotions ahead of next week’s NFP report. While jobs have been added to the economy, the volume hasn’t been enough to really inspire massive confidence. The promise of future stimulus remains, but so too does the Covid menace. Get that under control, and a better job market is likely to follow (if you’re reading President Biden!). 

OPEC meeting – tension on the way? 

A house divided against itself cannot stand, as Abraham Lincoln once said. Could the same be happening for OPEC?  

It looks like its biggest swingers are ready to clash once more. In the blue corner sits Saudi Arabia, top OPEC dog and world’s largest oil producer. In the red, we find Russia, pushing once more to taper oil cuts and start pumping more out. 

Saudi Arabia has always been the more cautious of the top OPEC players. It recently, voluntarily, cut a further million bpd out of its production in order to protect prices, on top of its OPEC commitments.  

7m barrels per day remains out of global supplies thanks to OPEC cuts. Its partially this that has helped oil rally recently, with WTI and Brent trading above $62 and $65 respectively.  

But Russia is keen to bring more oil to markets. Oil is key to Russia’s GDP, accounting for something like 40% of annual government revenues, so it’s little wonder to see it pushing hard to increase production levels.  

Global demand, however, remains tight. Will there has been some pick up with Covid cases and hospitalisations dropping in the US, for example, and the UK creating a roadmap to get out of lockdown on the strength of its vaccine programme, lockdown measures remain right around the world. 

OPEC and allies’ March meeting will be interesting. Traders and oil observers will only be too aware of last year’s March antics, where Russia and Saudi clashes led to a suspension of OPEC for a month.  

Major economic data 

Date Time (GMT) Currency Event 
Mon 01 Mar 01.00am CNH Manufacturing PMI 
 9.00am EUR Final Manufacturing PMI 
 9.30am GBP Final Manufacturing PMI 
 2.30pm CAD Manufacturing PMI 
 3.00pm USD ISM Manufacturing PMI 
    
Tue 02 Mar 3.30am AUD Cash Rate 
 3.30am AUD RBA Rate Statement 
 1.30pm CAD GDP m/m 
    
Wed 03 Mar 12.30am AUD GDP q/q 
 1.15pm USD ADP Non-Farm Employment Change 
 3.00pm USD ISM Services PMI 
 3.30pm USD US Crude Oil Inventories 
    
Thu 04 Mar All Day All OPEC-JMMC Meeting 
 3.30pm USD US Natural Gas Inventories 
    
Fri 05 Mar 1.30pm USD Average Hourly Earnings m/m 
 1.30pm USD Nonfarm Employment Change 
 1.30pm USD Unemployment Rate 

 

Key earnings data 

Date Company Event 
Mon 1 Feb Zoom Q4 2021 Earnings 
 Novavax Q4 2021 Earnings 
   
Tue 2 Feb Target Q4 2020 Earnings 
 Hewlett Packard Q1 2021 Earnings 
   
Wed 3 Feb Prudential Q4 2020 Earnings 
 Vivendi Q4 2020 Earnings 
 Gazprom Neft Q4 2020 Earnings 
 Marvell Technology Q4 2021 Earnings 
   
Thu 4 Feb Broadcom Q1 2021 Earnings 
 Sberbank Q4 2020 Earnings 
   
Fri 5 Feb London Stock Exchange Q4 2020 Earnings 

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