Weak NFP Sends US Rate Hike Off The Table

On Friday, the US April labour market report revealed a very weak growth in the nonfarm payrolls which initially sent the USD lower, but the Greenback reversed gains and ended more or less flat against most majors. The weak report has made most analysts believe that we only will see one rate hike this year from the Federal Reserve. US stocks closed in positive territory on rate speculation rather than the weak job report. Canada released job figures at the same time, which showed an unchanged unemployment rate of 7.1% against expectations of a slight increase to 7.2%. Although this is positive for the CAD, recently the currency has been more sensitive to changes in oil prices than fundamentals, and the recent build in inventories has made oil prices drop, which has led to the recent increase in the CAD.

USDCAD Daily – resistance at 61.8% Fibo and 50-day SMA

20160509 USDCAD.Daily

Overnight, markets in Asia have been mixed on back of weak Chinese Trade data over the weekend. Although the overall trade balance came out better than expected, the economy registered a drop in both imports and exports, which is bad for growth. Japan’s Finance Minister Aso commented about the recent JPY-strength and mentioned that an intervention would be possible should we see additional appreciation. USDJPY printed lowest levels since October 2014 last week and there are rumours in the market that the BoJ will intervene should the pair drop below 105. We see the risk of additional downside quite likely given the risks to the Japanese economy, but would reduce positions due to possible BoJ actions.

USDJPY Daily – outlook still negative, but room for a move to 108.50-area

20160509 USDJPY.Daily 

This morning, UK Halifax House Prices fell short of expectations and has sent Cable to 2-week lows at 1.4379. For the UK economy, we have a string of figures with the BoE decisiotn and Inflation Report as the key data, to be released on Thursday.

GBPUSD 4h – testing 50% Fibo in recent wave<

20160509 USDJPY.Daily

Today, there is little activity on the macro front, but we have some activity on the monetary and political front. The Eurogroup will meet in order to review the adjustment programme on the Greek economy and in the US, we have Fed Chicago President Evans hitting the wires during the EU session (speaking in London) and Fed President Kaskari on the scene in Minneapolis at 19CET.

Looking ahead, we could see China impacting the market this week with CPI and PPI (Tuesday), while key figures from the Euro zone would be the GDP on Friday. From the US, the front is also relatively quiet until the end of week, where we have PPI, Retail Sales and preliminary May figures from the U. of Michigan.

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