FX News Today
European Fixed Income Outlook: The 10-year Bund yield is up 1.1 bp at 0.305% in opening trade, French yields are also moving higher, and 10-year Treasury yields are up 1.3 bp at 2.842%. Stronger than expected German Production numbers underpinned confidence in the recovery and European Stock Futures are moving higher in tandem with US futures after Asian markets seemed to take the official start of Trump’s tariff war in their stride. Improved risk appetite is also underpinning the outperformance of peripheral Bond markets in early trading. With German production data out of the way, the calendar only has UK House price data and markets will be looking ahead to the release of US payroll numbers in the PM session. The Austrian central bank conference continues and in the UK May is heading for yet another crunch cabinet meeting on Brexit.
FX Update: The Yen has weakened amid a backdrop rallying stock markets. USDJPY lifted to a three-day high of 110.78, while EURJPY rallied to three-week highs and AUDJPY, which has been the biggest percentage gainer so far today, has ascended to 3-day highs. The US today implements tariffs on $34 bln worth of Chinese imports, well anticipated by markets (and hence the lack of negative reaction today on Asian, including Chinese, bourses today) and a tiny amount in the scheme of things, although the worry is that things could escalate with Trump having threatened tariffs on nearly all Chinese imports. Elsewhere, EURUSD, which been buoyed this week by broader Euro firmness following a run of encouraging data out of the Eurozone – the latest being a solid 2.6% m/m gain in German Industrial Production in April data — has lifted back above 1.1700, making a high so far of 1.1714 and drawing in yesterday’s 10-day high at 1.1720. Market focus will now fall squarely on the US jobs report, and, in the case of USDCAD, the simultaneous release of the Canadian jobs report.
Charts of the Day
Main Macro Events Today
- Canadian Employment Change – Expectations –a 25k rebound in June after the 7.5k dip in May and 1.1k dip in April. A gain in June would join the 32.3k rise in March and 15.4k gain in February to leave three months of job gains and three months of job declines in 2018.
- Canadian Trade Balance – Expectations – a widening to -C$2.2 bln in May from -C$1.9 bln in April. Exports are seen growing 2.5% m/m after the 1.6% rise in April, as rising oil prices continue to lift the value of energy exports. Imports are projected to grow 2.0% after the 2.5% drop in April that followed the huge 6.2% gain in March.
- US NFP – Expectations – June Nonfarm Payroll report is expected to show a solid 195k increase in jobs after the 223k gain in May, while the jobless rate should hold steady at a low 3.8%. There’s ongoing controversy over the degree of slack in the system.
- US Average Earnings – Expectations – Average hourly earnings are anticipated rising 0.2% for an annual gain of 2.8% y/y, up from 2.7% in May, which may be a sign of rising pressures. Payroll growth so far this year is averaging 207k, up from 182k in 2017.
Support and Resistance levels
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Andria Pichidi
Market Analyst
HotForex
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