US labour market remains strong – Commodity currencies under pressure

Following an upbeat US Labour Market Report for March, risky assets in the US enjoyed a positive mood which this morning has continued in Asia, less Japan. China is closed today for Tomb Sweeping Day. A weaker than expected Australian Retail Sales for February has overnight sent the AUD lower across the board and AUDUSD is back below the 61.8% Fibo retracement in the recent wave, but remains within an uptrend. The CAD lost some ground as Oil continued lower and in precious metals, spot gold fell and closing in on near-term support at last week’s low at 1206.52.

20160404 AUDUSD.Daily

Main figure on Friday was the March Job Report from the US, where the Nonfarm Payrolls at 215k beat expectations at 205k while the February print was revised higher to 245k from 242k. Then Unemployment rate came out at 5% vs. 4.9% expected. The latter is attributed to a further increase in the labour force participation rate, which rose to 63%. On Friday, we also saw an increase in the US ISM Manufacturing figures to 51.8, while signals additional expansion in the sector. A weaker US Dollar and a stronger work force has boosted the manufacturing sentiment, which should materialise into a positive manufacturing output and contributing positively to growth. Also on the consumer side, the U. of Michigan Consumer Sentiment came out better than expected, albeit showing a slight decline from the February figure.

From Europe, the EU Manufacturing PMI showed a positive surprise, while the UK one disappointed slightly. Both indices remained above 50.

On a technical level, EURUSD took out the recent 2016 highs and have closed above the Wedge, but posted a Doji on a daily chart on Friday, which indicates a level of indecisiveness and we have possible divergence in Stochastics. This means that we could see the pair being offered in today’s session. Resistance at Last week highs before the highs from October 2015 just below the 1.15-figure. Support at the NFP-lows coinciding with daily pivot support at 1.1335 before Wedge trend support at 1.1275.

20160404 EURUSD.Daily

Today, we have PPI and Unemployment figures from the Euro zone, while the US at 1545CET will post ISM NY Business Conditions for March as well as Factory Orders at 1600CET. Markets will also tune in to FOMC Member Rosengren’s speech at 1530CET and Bank of Canada’s Governor Poloz will address markets at 1600CET. This could create some stir for USDCAD –  a pair which remains in focus due to its high correlation to oil. USDCAD gapped higher on the opening and is back above trend resistance projected from 2016 highs and the 61.8% Fibo in the Apr 2015 lows to 2016 highs. While we remain overall negative on the pair, we could see a throw-back higher.

20160404 USDCAD.Daily

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