China Trade Balance, Euroland GDP & Employment Growth, and U.S. Labor Market Situation Data – Currency Thoughts
China Trade Balance, Euroland GDP & Employment Growth, and U.S. Labor Market Situation Data
March 7, 2025
With investors awaiting U.S. jobs figures due in just over a half hour, the dollar’s continues to show a soft tone, touching its lowest levels overnight in 17 weeks against the euro ($1.0871) and in a similar span against the yen of 147.2. Net dollar changes amount to a drop of 0.5% against the euro, 0.4% relative to the Swiss franc and 0.2% versus sterling, but the greenback is currently trading at yesterday’s closing level against the yen. Equities abroad played catchup to yesterday’s beating in America’s trading day, with markets in Japan and Australia closing down 2.2% and 1.8% , and share prices so far in Germany, France and Italy posting losses of 1.7%, 1.1% and 0.9%. Ten-year sovereign debt yields have declined by 4 basis points in Germany and Italy, 3 bps in the United States and France and 2 basis points in Japan. Bitcoin’s price (-1.1% so far today) failed to benefit from President Trump’s support. and oil recovered 1.3%.
China’s $170.5 billion combined trade surplus in January-February exceeded the year-earlier level by a tad over 36%, thanks to an unexpected 8.4% plunge in imports and a 2.3% advance in exports. Chinese international reserves meanwhile rose $1.1 billion last month.
Employment in the euro area during 4Q 2024 rose 0.1% on quarter and 0.7% on year, while real GDP increased by 0.2% on quarter and 1.2% on year. GDP last quarter contracted in both Germany (-0.2%) and France (-0.1%) but rose in Spain (0.8%), Portugal (1.5%), the Netherlands (+0.4%) and Italy (+0.1%). Sub-1% growth in the euro area occurred in both 2023 of 0.4% and 2024 of 0.9% compared to robust U.S. GDP expansion of 2.9% in 2023 and 2.8% last year. The euro area got positive growth contributions last quarter from personal consumption and government expenditures (each up 0.4%) but exports and and imports fell. Inventories impacted growth negatively as well.
The market consensus from the forthcoming U.S. labor department report is looking for jobs to rise a bit over 150k, unemployment of about 4% and annual wage growth of around 4.1%. ADP estimated 77k increase of private-sector jobs plus a potentially adverse effect from DOGE’s decomposition of federal payroll workers suggest that there could be disappointment when the report is released.
On the central banking front, authorities at the National Bank of Kazakhstan lifted their policy interest rate today by 125 basis points to 16.5%, just 25 basis points south of the past cyclical high of 16.75% from December 2022 until August 2023. The rate had subsequently been cut toa low of 14.25% from June 2024 until a 100-basis point hike in late November. This about-face was triggered by a rise in Kazakhistani consumer price inflation from 8.3% last September to 8.9% in January and 9.4% last month.
Yesterday, the Central Bank of Turkey’s policy interest rate was cut by an as-expected 250 basis points to 42.5%. That was the third drop of 250 basis points since December. The rate had previously been at 50.0% since an increase in March 2024. Turkish CPI inflation fell to 39.7% last month from 42.1% in January.
Also expected yesterday, the European Central Bank’s three interest rates were each lowered 25 basis points, bringing the cutting edge deposit rate to 2.5%, a level sufficiently reduced to elicit a comment from ECB officials that the stance is now meaningfully less restrictive than before this round of cuts than began in September. Officials at the European Central Bank also unveiled updated forecasts that project CPI inflation dropping from 2.3% this year to 1.9% in 2026 and 2.0% in 2025. Core CPI declines from 2.2% this year to 2.0% next year and 1.9% in 2027, and GDP growth is forecast low but improving from 0.9% this year to 1.2% in 2026 and 1.3% in 2027.
Malaysia’s central bank policy rate was kept unchanged at 3.0%, which represents a cyclical high first reached in March 2023. That’s restrictive compared to CPI inflation of 1.7%. Like many central bank authorities U.S. tariff policy and other 180-degree turns in policy represent a huge source of uncertainty that justifies caution in in easing monetary restraint.
Just In: U.S. non-farm payroll employment rose 151k last month, slightly less than forecast. Employment in the two prior months was reestimated as 2k less than previously indicated. Wage growth rose 0.3% in February, meeting analyst expectations, but their year-on-year advance of 4.2% was marginally above January’s figure and the market consensus of 4.1%. The biggest divergence from market expectations in the February figures involved the combined rate of un- and underemployment, which jumped half a percentage point to 8.0%. Unemployment ticked up 0.1 percentage point to 4.0%. Another disappointment was a 0.2 percentage point decline in labor market participation to 62.4. Finally, government jobs only went up a quarter as much as in January, no doubt reflecting DOGE’s work.
Other data highlights this Friday featured a surprise 7.0% slump in German factory orders during January, more than twice what analysts had been anticipating and the weakest month-on-month performance in a year.
The French current account and trade deficit in January amounted to EUR 2.2 billion and EUR 6.5 billion.
Estonian CPI inflation accelerated 1.4 percentage points to 5.3% last month, twice last June’s low of 2.5%.
Mexican consumer price inflation ticked up to 3.8% in February from a 4-year low of 3.6% in January.
Canadian February labor market data depicts an ailing sector even before the big tariff imposed by Canada’s largest trading partner. The jobless rate remained at 6.6%, wage growth accelerated to 4.0% from 3.7%, and jobs increased just 1.1k well below January’s gain and the increase that forecasters had been predicting.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank Negara Malaysia, Central Bank of Turkey, Chinese trade surplus, ECB, National Bank of Kazakhstan, U.S. jobs report Feb 2025
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