FOREX: Fresh Session Highs for USDJPY Post-Payrolls, 50-Day EMA Eyed
Jun-06 12:51
- The usual frantic price action for USDJPY in the aftermath of the US employment data, as the higher headline NFP change saw a quick spike to 144.68 before quickly reversing south on the lower revisions and a high unrounded unemployment rate of 4.244%.
- However, the pair was well supported on the dip to 144.10 and has subsequently rallied to fresh session highs of 144.74 as markets focus on the sizeable beat for AHE growth, which of course follows yesterday's surprisingly strong ULC increase for Q1 at 6.6% annualized. The latest headline/timeline on a US/China meeting likely provided an additional tailwind, feeding into the cautious optimism surrounding negotiations.
- We noted earlier that while moving average studies have remained in a bear-mode position, they have continued to be tested in recent weeks. A close above the 50-day EMA, intersecting at 145.15, would bolster a bullish threat for USDJPY, while key short-term resistance has been defined at 146.28, the May 29 high.
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GILTS: Off Highs, Post-Auction Momentum Stalls
May-07 12:41
Gilts hold the bulk of the rally detailed earlier, backing away from session highs over the last couple of hours after the post-auction momentum stalled.
- Futures have traded as high as 93.32, well shy of next resistance at the May 2 high (93.93). Last 93.24.
- Yields 2-5bp lower on the day, ~1bp off session lows, flattening bias maintained, last week’s yield lows intact/unchallenged across the curve.
- 2s10s ~13bp below closing cycle highs, 5s30s ~8bp below closing cycle highs.
- Spread vs. Bunds continues to oscillate in the 195-200bp closing range witnessed over the last 3 sessions
- Domestic headline flow remains limited, with external cues set to dominate between now and tomorrow’s BoE decision.
BUNDS: German 10yr Yield is nearing 2.50%
May-07 12:28
- Bund is still probing Monday's high of 131.24 (circa 2.5% in Yield), all very gradual, but Volumes have picked up a little, Schatz was bought in 10k, Bobl 5k.
- While extreme moves should still be limited ahead of the Fed, further upside traction opens to 131.71, followed by Friday's gap, up to 131.90 and the big one at 132.03.
- In Yield terms, next support comes at 2.43%, which equates to 132.01, close to that 132.03 level.
US: MNI POLITICAL RISK - Bessent Tees Up Trade Talks With China
May-07 12:18
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- President Donald Trump will receive an intelligence briefing in the morning before meeting Vice President JD Vance for lunch in the afternoon. Asian markets will be watching for a signal on how the White House will approach escalating hostilities between India and Pakistan.
- After upending transatlantic ties at the Munich Security Conference in February, Vance will speak at an event today hosted by the same organisation.
- Markets will be monitoring Trump’s Truth Social account for his response to the Fed's rate decision.
- Treasury Secretary Scott Bessent is on Capitol Hill again today to give his 'Annual Testimony' to the House Financial Services Committee. Bessent and USTR Jamieson Greer are aiming to dial down tensions with Beijing at their first official talks with Chinese counterparts this weekend.
- The US trade deficit rose in March as US businesses stockpiled goods.
- Trump struck a conciliatory tone with Canadian Prime Minister Mark Carney but downplayed the prospect of a trade deal.
- The budget ‘Big Six’ will meet at Treasury today as Republican leaders struggle to get moderates and conservatives on the same page on reconciliation spending cuts.
- Senate Majority Leader John Thune (R-SD) is expected to hold a Thursday vote on a landmark crypto bill.
- Trump announced a truce with the Houthis and teased a "very big announcement" ahead of his Middle East trip.
- Poll of the Day: The economy is a “liability” for Trump despite a stabilisation of his approval.
Full Article: US DAILY BRIEF
