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Intermarket:
• SP Futures 4198 (+0.10%)
• EUSTXX 3998 (+0.73%)
• Crude Oil 65.10 (+0.62%)
• US 10YR 1.57% (+0.44%)
• EurUsd 1.2065 (+0.00%)
• UsdJpy 109.07 (-0.02%)
• DAX 15268 (+0.63%)
Risk appetite is buoyant going into the final European open of the week, after a strong performance in Asia followed an equally strong close on Wall Street. Strong China PMI data was supportive. USD weakness prevails as Fed officials continue to fend off taper talk, which aided the rise in equities alongside industrial metals, bullion and crude oil. Yields remain soft.
Markets await today’s Non-Farm Payrolls report, with consensus at 978K. The reaction to NFP will be influential as the FED is focused on the strength of the labour market.
The Pound dismissed a hawkish tilt by the Bank of England as markets await the results from the Scottish election (due today or tomorrow) and increasing UK-French tensions with French fishermen calling for a blockade of Saint Helier.
In crypto-space, Ethereum rises to new record high over $3,600, while Goldman Sachs is offering Bitcoin derivatives to investors.
Looking ahead: today we get US Non-Farm Payrolls, Cad Employment data, a speech from Biden on Payrolls, and speeched from ECB’s Lagarde, BOE’s Haldane and Broadbent, Fed’s Barkin.
Matters that Matter:
• Dow Jones posts another record high
• China Caixin/Markit April PMIs: Services 56.3 (prior 54.3)
• US President Biden to speak on US NFP report at 15.00 GMT
• RBA repeats no rate hike until 2024 at earliest
• Japan to extend state of emergency and add further prefectures
• Australia: NSW premier not expecting lockdowns at this stage.
• AU Services PMI: 61.0 (prior 58.7)
• Goldman Sachs offers Bitcoin derivatives to investors
• UK PM Johnson will confirm Government coronavirus guidance is changing May 17
• Scottish election results due between Friday-Saturday.
Majors 1-Day View:
USDJPY
- Prices have posted little changed closes on each of the past 3 days, with trading contained within Monday’s 108.90-109.70 range. As such, signals are currently neutral within the range ahead of key event risk today.
- Range trading ahead of NFP.
- Yields not supportive this week despite good data.
- NFP decisive for direction.
EURUSD
• Prices posted gains of ¾ Big Fig on Thursday, interrupting the trend of lower daily highs and switching signals to a cautious bullish stance for Friday.
• Strong EU data seems supportive.
• Movement may be limited ahead of NFP.
AUDUSD
• After a losses of ½ in Asia trade, buyers returned from close to .7700 on Thursday, prices rallying over ¾ Big Fig to post a bullish outside day. As such, signals are more positive for Friday but prices remain within the broad .7700-.7800 range. As such, we continue to suggest selling around .7800/10 and buying around .7700 until the range is broken.
• China/Australia tensions shrugged off.
• Bullish outside day and strong recovery constructive signals.
• NFP key to near-term direction.
GBPUSD
• Prices have posted 3 little changed closes in a row this week, with trading entirely contained within the April 30 1.3800-1.3960 range. As such, trend signals are weak but on balance, with buyers returning on Thursday from close to 1.3850, there is a slight bullish bias on balance going into Friday.
• BOE’s taper accompanied by dovish language and a dissenter left the Pound in limbo.
• Tensions in Jersey weighed on GBP.
• Scottish election results to be known late Friday or on Saturday.
FX Relative ATR Grid
Comment: Volatility expanded on Thursday across the board, ahead of Friday’s NFP report. Movement is expected to be limited ahead of the data.
FX Relative Strength Grid
Comment: the strongest trends are currently CAD (bullish), CHF (bullish). The strongest momentum was seen yesterday in CHF (bullish), JPY (bearish), GBP (bearish), USD (bearish).