Economic wrap and key events ahead - Westpac

Analysts at Westpac offered an economic wrap of Friday's US close and risk events for the day ahead.

Key Quotes:

"U.S non-farm payrolls for April beat estimates with a 211k rise (190k expected), following a weak March, with a decent 0.5% rise in hours-worked. Weather may be a factor, with storms in the previous two months. The goods sector was notably robust, and there was a 0.3% rise in average hourly earnings after downward revisions. We also saw smaller gains of 156k for civilian jobs and 12K for the labour force that left a cycle-low 4.40% unemployment rate, but also participation rate decline to 62.9%. Overall, the report supports the FOMC's view that Q1 economic weakness was transitory, justifying the market’s expectations the Fed will hike in June.

There was plenty of Fedspeak, although Yellen and Fischer’s comments both avoided monetary policy. However the other FOMC members offered plenty: Evans felt it was important the Fed hits its inflation goal; Rosengren thought QE made a difference; Bullard agreed regarding financial assets but not regarding inflation, was not opposed to one more hike in 2017, and expected balance sheet shrinkage in H2; and Williams thought the Fed was close to its inflation target and will start normalizing its balance sheet in the near future.

In the French Presidential election, centrist Macron easily beat far-right populist Le Pen, by around 65% to 35% as at the time of writing. Macron, who is also pro-EU and pro-trade, is set to become the youngest ever elected French head of state. However, he still faces challenges from a potentially divided Parliament following elections there in June. At least five political formations are contesting the 577 seats.

Event Risk

Australia: Mar dwelling approvals are expected by Westpac to fall 1.5%, consistent with the underlying slowdown. However, given Feb’s 8.3% surge along with a 2.2% rise in Jan, a sharper pull back is possible. We also get the Apr NAB business survey which has been tracking above average through 2017 with conditions particularly elevated, as well as Apr ANZ job ads.

China: The Apr trade balance is expected by the market survey to rebound to CNY35.85bn from CNY23.92bn in Mar as recent readings have been affected by the Lunar New Year.

US: Fedspeak involves Bullard in a panel discussion on monetary policy and Mester speaks on the role of the Fed and the economic outlook."