Today is another NFP Friday so trading conditions were relatively tight and price action was rather choppy as forex traders hunkered down ahead of the NFP report.
It wasn’t complete snooze fest, however, since the yen clearly dominated its peers while the Aussie was broadly weaker.
As for the Greenback, it was more mixed but still a net winner ahead of the NFP report.
- French budget balance: -€33.1B vs. -€28.5B previous
- French trade balance: -€5.3B vs. -€4.9B expected, -€5.0B previous
- Spanish unemployment change: -86.7K vs. -100.2K expected, -47.7K previous
- Spanish services PMI: 55.6 vs. 56.1 expected, 56.2 previous
- Italian services PMI: 52.6 vs. 53.0 expected, 52.6 previous
- French final services PMI: unchanged at 57.4 as expected
- German final services PMI: 53.0 vs. no change from 54.1 expected
- Euro Zone final services PMI: 54.7 vs. no change from 55.0 expected
- Euro Zone retail sales m/m: 0.1% vs. 0.5% expected, 0.3% previous
Today is another U.S. non-farm payrolls (NFP) Friday! And that means that volatility and directional movement were both in short supply as traders kept their heads down and sat on their hands ahead of the NFP report.
Anyhow, if you’re planning to trade the NFP report, then you may wanna check out Forex Gump’s Event Preview for the April NFP report.
U.S. and China agree on some trade issues, but…
According to a Reuters report that cited China’s Xinhua News Agency, U.S. and Chinese officials have supposedly had a meeting of the minds on some issues related to trade.
However, no definitive deal has been reached yet because “relatively big” issues remain unresolved. Also, both sided have yet to reveal what issues have already been resolved and what still need some work.
Fading appetite for risk in Europe
The major European equity indices opened on a strong footing and then proceeded to climb higher, which is a sign that risk-taking was the name of the game at the start of the session.
However, the major European equity indices later came off their intraday highs, signaling that risk aversion may be coming back.
Market analysts attribute the earlier risk-on vibes to strong demand for banking shares.
As for the later signs of returning risk aversion, there’s no clear reason for that.
However, the usual skittishness ahead of the NFP report is one probable reason. Another is lingering trade war fears since the U.S. and China haven’t fully resolved their issues yet.
- The pan-European FTSEurofirst 300 was up by 0.15% to 1,510.98 but off the day’s hight at 1,514.77
- Germany’s DAX was up by 0.47% to 12,750.35 but off the day’s hight at 12,768.95
- The blue-chip Euro Stoxx 50 was up by 0.16% to 3,531.45 but off the day’s hight at 3,539.05
U.S. equity futures were already in negative territory, which supports the idea that risk appetite was fading.
- S&P 500 futures were down by 0.27% to 2,624.75
- Nasdaq futures were down by 0.36% to 6,640.75
Major Market Mover(s):
The yen was the top-performing currency of the morning London session, very likely because of signs that risk aversion was making a comeback.
USD/JPY was down by 20 pips (-0.18%) to 108.92, NZD/JPY was down by 16 pips (-0.20%) to 76.39, CAD/JPY was down by 21 pips (-0.25%) to 84.63
Fading appetite for risk and sliding gold prices were very likely weighing down on the Aussie since the Aussie was the worst-performing currency of the session.
AUD/USD was down by 8 pips (-0.11%) to 0.7520, AUD/JPY was down by 20 pips (-0.25%) to 81.93, AUD/CHF was down by 12 pips (-0.16%) to 0.7509
The Greenback was mixed but was able to eke out some wins against most of its peers during the morning London session, likely because of preemptive positioning and/or short covering ahead of the NFP report, since there wasn’t really anything else.
NZD/USD was down by 3 pips (-0.04%) to 0.7013, EUR/USD was down by 6 pips (-0.05%) to 1.1968, GBP/USD was down by 8 pips (-0.06%) to 1.3556
Watch Out For:
- 12:30 pm GMT: U.S. non-farm payrolls (+190K expected vs. +103K previous), jobless rate (4.0% expected vs. 4.1% previous), and average hourly earnings (0.2% expected vs. 0.3% previous)
- 1:00 pm GMT: ECB Member and Deutsche Bundesbank President Jens Weidmann will speak
- 2:00 pm GMT: Canada’s Ivey PMI report will be released (60.2 expected vs. 59.8 previous)
- 4:00 pm GMT: New York Fed President William Dudley is scheduled to speak
- 7:00 pm GMT: San Francisco Fed President John Williams will speak
- 9:30 pm GMT: U.S. Fed Governor Randal Quarles has a speech