Thursday 7th May: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei down 1.00 %, Shanghai Composite lost 1.40 %, Hang Seng declined 0.20 %, ASX fell 0.75 %
  • Commodities: Gold at $1187 (-0.25 %), Silver at $16.45 (-0.40 %), WTI Oil at $60.40 (-0.90 %), Brent Oil at $67.25 (-0.40 %)
  • Rates: US 10 year yield at 2.24, UK 10 year yield at 2.00, German 10 year yield at 0.61

News & Data:

  • Australia Employment Change -2.9k, Expected: 4k, Previous: 48.2k
  • Australia Unemployment Rate 6.2 %, Expected: 6.2 %, Previous: 6.1 %
  • Australia Participation Rate 64.8 %, Expected: 64.8 %, Previous: 64.8 %
  • Australia AIG Construction Index 47.0, Previous: 50.0
  • Fitch: China’s Slowdown As Expected, But Downside Risks Mount
  • South Korea Finance Minister Choi: Will Take Action When FX Moves Too Rapidly — RTRS
  • Banks May Settle FX Probes As Early As Next Week – WSJ

Markets Update:

Overnight, the US Dollar weakened again slightly, just one day ahead of the US jobs data release. The main event in the APAC session was the Australian employment data release. While the employment change figure missed expectations at -2.900 vs +4000 expected, there was an upward revision for the previous release. Further, the unemployment rate remained steady at 6.2 %, in line with expectations. Selling from algos drove AUD/USD to a low of 0.7920 immediately after the release, but the pair quickly rebounded from there and is now again near the 0.80 level. Immediate resistance is seen at 0.8030, but the next major hurdle for AUD longs is 0.8075, which is last week’s high.

AUD/NZD fell sub-1.06 after the data release, but also recovered from there and rallied back to 1.0650. There is decent buying interest noted at the former resistance area at 1.0520/30. The Kiwi Dollar remains weak overall after yesterday’s terrible employment data and NZD/USD is likely to consolidate further without a clear directional bias pre-NFP. Meanwhile, USD/CAD had a solid bounce off the 1.1940 support level and has recovered to 1.2040 overnight. While the recovery in Oil prices has helped the Canadian Dollar higher, the outlook for the economy remains weak and unless NFP disappoints, CAD strength is likely to be limited.

USD/JPY didn’t do much overnight. Tokyo has returned from a 3-day holiday, but flows were light overall. Dealers report bids ahead of the 119.00, with stops from short-term specs resting sub-119.20 and below the big figure. To the topside, decent selling interest expected pre-120.00.

Upcoming Events:

  • 07:00 BST – German Factory Orders
  • 07:45 BST – French Industrial Production
  • 07:45 BST – French Trade Balance
  • 09:00 BST – Norges Bank Interest Rate Decision
  • 13:30 BST – US Initial Jobless Claims
  • 13:30 BST – Canadian Building Permits
  • 14:45 BST – US Bloomberg Consumer Confidence

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