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The Greenback returned some of its earlier losses on weaker economic data, a dip in equities, and lower U.S. bond yields. Could traders be reducing their exposure ahead of the NFP release?

  • Canadian trade deficit widened from 2.9B CAD to 4.1B CAD
  • U.S. preliminary non-farm productivity up 0.7% vs. 0.9% forecast
  • U.S. unit labor costs at 2.7% vs. 3.1% consensus
  • U.S. initial jobless claims at 211K vs. 225K forecast
  • U.S. trade deficit narrowed from $57.7B to $49B vs. $50B consensus
  • U.S. ISM non-manufacturing PMI slumped from 58.8 to 56.8 vs. 58.1 forecast
  • U.S. factory orders up by another 1.6% vs. 1.3% estimate
  • Japanese banks closed for the holiday

Major Events/Reports:

Mixed U.S. data

Economic reports from Uncle Sam cam in a mix of green and red, but market watchers appeared to zoom in on the ISM non-manufacturing PMI miss.

The index fell from 58.8 to 56.8 versus the consensus at 58.1 to reflect a slower pace of industry growth. Underlying components indicated that new orders and prices ticked higher, but the employment sub-index sank from 56.6 to 53.6 to signal a potential NFP miss.

On a less downbeat note, the trade deficit narrowed from $57.7 billion to $49 billion versus the estimated $50 billion shortfall as exports rose $4.2 billion in March.

Initial jobless claims also beat expectations at 211K versus the estimated 225K figure, slightly higher than the earlier 209K read. Factory orders rose another 1.6% versus the estimated 1.3% gain.

Return of risk aversion?

U.S. equity indices closed mostly lower for the day, but bond yields also retreated.

  • Dow 30 index is up 5.17 points to 23,930.15 (+0.02%)
  • S&P 500 index is down to 2,629.73 (-0.23%)
  • Nasdaq is down to 7,088.15 (-0.18%)
  • U.S. 10-year yield down 2 bps to 2.945%

Gold ticked higher while other commodities were hammered:

  • The precious metal is up $7.39 to $1,313.60 (0.57%)
  • WTI crude oil retreated to $68.56 per barrel
  • Brent crude oil is down to $73.74 per barrel

Major Market Mover(s):

USD

Dollar bulls retreated as the aftermath of a less upbeat FOMC statement led to profit-taking ahead of the NFP release. To top it off, the slump in the jobs component of the ISM non-manufacturing PMI may have weighed on expectations.

EUR/USD bounced from the 1.1950 area to the 1.2000 mark, GBP/USD bounced to 1.3571 before consolidating, USD/JPY dipped to a low of 108.94, and USD/CHF is down to .9972.

JPY

With risk-off flows in play and traders hesitant to buy the dollar, the Japanese yen was able to rake in safe-haven gains.

EUR/JPY is down to a low of 130.74, AUD/JPY dipped to 81.74, GBP/JPY sank to a low of 147.61, and CAD/JPY tumbled to a low of 84.48.

Watch Out For:

  • Japanese banks closed for the holiday
  • 2:30 am GMT: RBA monetary policy statement
  • 2:45 am GMT: China’s Caixin services PMI (dip from 52.3 to 52.2)