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Another Non-Farm Payrolls Friday looms ahead following Easter weekend

Apr 3 • Morning Roll Call • 78 Views • No Comments

Forex yesterday was driven by holiday-thinned trades, hence a typical holiday-quiet Asian session was witnessed and left most majors at the mercy of the risk trends and irregular volatility. On the macroeconomic data front, downbeat Japanese Tankan manufacturing and non-manufacturing surveys added to the weight of Yen, while an unexpected drop in Chinese Caixin manufacturing PMI kept a check on the recovery in both the Antipodeans. The pound was the top gainer in yesterday’s session amid risk-on market profile, as the Asian stocks traded mostly higher in tandem with Treasury yields.

Renewed focus on the US employment landscape will manifest itself at the NFP release as the US Fed gears up for further interest rate hikes this year, but wage growth within the US economy could constrain further movement on rates if wages continue to waffle despite improving employment conditions. Traders will be looking into the numbers buried inside the NFP report for clues about where the Fed is likely to be headed at their next rate meeting, and the headline NFP figures could take a backseat to wage figures in a similar pattern to the previous release.

The Euro and the Sterling both fell in the latter half of last week, dropping back into consolidation areas near each pair’s respective 34 EMA as the US Dollar Index staged a brief recovery, but ultimately markets are heading into the new week with major pairs nearing the middle after last week’s action. The Sterling will be seeing a relatively quiet week on the macro calendar while the EUR faces preliminary Eurozone CPI figures for March early Wednesday at 09:00 GMT. Economic activity slowed within the European Union for the first quarter of 2018, and fears of further contraction could hang over the Euro, especially if Wednesday’s CPI fails to meet the forecast of 1.4 percent for the year-on-year figure.
The Aussie has fared poorly against the USD as the interest rate differential between the US Fed and the Reserve Bank of Australia (RBA) begins to widen, and confidence in the AUD has been steadily evaporating since reaching a peak of 0.8135 in January. This week sees the RBA’s Rate Announcement, but Aussie buyers are unlikely to find much inspiration as the RBA is widely expected to stand pat on interest rates until sometime next year.

The Yen continues to suffer from an excess of popularity as the broad market’s safe haven of choice, and the USD/JPY is still hanging near year-long lows despite the Dollar’s late-March drive upwards, which was only able to keep the USD flat against the Yen for March before sputtering out as continued trade war fears hang over markets like a bad habit, and risk appetite is unlikely to get very far out of the gate following China’s surprise stamping of tariffs on American goods late Sunday. –FXStreet

EUR/USD

The EUR/USD is recovering from Monday’s selloff in the US session where it hit a bottom at 1.2282, and the pair is currently trading back above the 1.2300 handle ahead of the European markets. –FXStreet

GBP/USD

The GBP/USD avoided a break below 1.40 during the Easter holidays, but the relief will likely be short-lived if the trade war fears drive stocks lower and UK PMI misses estimates by a wide margin. –FXStreet

USD/JPY

The USD/JPY pair has recovered from Monday’s decline, and the Yen is releasing its grip in Asia trading. The current technical outlook for the Yen remains in place, and as FXStreet’s own Valeria Bednarik noted, “the pair surged by the end of last week, but selling interest rejected it at around 107.00, a sign that bears are still in the driver’s seat. –FXStreet

Gold

Gold (XAU/USD) retreated from the overnight high of $1,345 to $1,337 as S&P 500 futures strengthened 0.4 percent, signaling the US stocks are likely to regain poise following Monday’s sell-off. –FXStreet

ECONOMIC CALENDAR EVENTS FOR APRIL 3rd

AUD Cash Rate
AUD RBA Rate Statement
EUR German Retail Sales m/m
EUR Spanish unemployment Change
CHF Manufacturing PMI
EUR Final Manufacturing PMI
GBP Manufacturing PMI
NZD GDT Price Index

 

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