Currency Updates:
The Australian Dollar (AUD): A much better than expected NFP number ripped the AUD/USD lower to test support near the April low. A low of 0.9203 was made and no further losses were seen as the market took a look at the internals of the jobs data and decided the report wasn’t the game changer to what the market was looking for. The pair rallied to a high of 0.9275 and little pullbacks were seen. A fairly active week for the AUD, with the RBA rate decision (unchanged f/c), employment and the RBA’s MPS.
The AUD/USD: 0.9190-0.9200 been holding up strong, range trades still in play but for now the AUD need to break above 0.9320-30 area for a better uptrend confirmation. Risk events coming up this week for the pair, should the results be AUD bearish, the April low may break and the developing H&S top on daily charts is likely to be confirmed. The door may then open to a test of 0.8900-25 area.
EUR/USD: The EUR slipped below the 21-DMA and pierced the daily cloud top. A low of 1.3812 was made before the market took a deeper look into the jobs data. A big drop in the participation rate tarnished the US rate drop while the payroll data and lack of wage growth gave the market the sense the report wasn’t robust enough to seriously lift rates and the USD. EUR regained back above 21-DMA to a high of 1.3881 giving a better outlook for the next ECB announcement. The long lower wick on the daily candle and bullish engulfing on the weekly candle combine with rising day/week RSIs to suggest stops above 1.3906 and near 1.3930 are vulnerable.
USD/JPY spiked beyond its daily Cloud top at 102.84 before faltered in front of the 61.8% of the early Apr slide at 103.06 in the wake of the strong US NFPs. Surging Tsy ylds did the heavy lifting as the holiday-thinning and BOJ’s wait-and-see left N225 futures little changed. Unfortunately for USD/JPY yen cross buyers, the demand for dollars quickly dried up and prices fell below their pre NFP levels, the O/N lows and the daily Cloud base before finding support by Thur’s 102.13 low. Internals of the Jobs report were poor and the US curve flattening from both ends suggested tapering and eventual tightening loom over the medium-term. S&Ps & N225 futures softened in the face of those prospects amid uncertainty about the post-winter US recovery. Long wick on the USD/JPY daily candle looks bearish, but the pattern of higher swing lows since Fed has yet to be broken. Monday sees huge strikes that should encapsulate spot – 5bln between 101.50-102.00 and similar size between 102.50-103.00. There are also some 8bln expiries next week between 103.00-104.00. Implied vols are at their lowest since ’07 to suggest no real expectations of a break out yet.
Looking Ahead – Economic Data (GMT)
• 01:00 Sat CN NBS Non-Mfg PMI Apr 54.50-prev
• 23:30 AU AIG Services Index Apr 48.9-prev
• 00:30 AU TD-MI Inflation Gauge Apr 0.20%-prev
• 01:30 AU Building Approvals Mar f/c 1.00%, -5.00%-prev
• 01:30 AU Private House Approvals Mar -2.10%-prev
• 01:30 AU ANZ Newspaper Job Ads Apr 4.50%-prev
• 01:30 AU ANZ Internet Job Ads Apr 1.30%-prev
• 01:45 CN HSBC Mfg PMI Final Apr 48.30-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
