FOREX: USD Index Rises 0.5% Following ‘Solid’ Jobs Report
Jun-06 17:35
- After some initial two-way price action in the immediate aftermath of the US employment report, the greenback has strengthened, prompting the USD index to rise 0.5% and look set to close back above the 99.00 mark. Optimistic price action for equities has weighed on the Japanese Yen, which underperforms across G10.
- A higher-than-expected 139k change in nonfarm payrolls was offset by lower revisions to the April figure and a high unrounded unemployment rate of 4.244%. However, the dollar was well supported as markets focus on the sizeable beat for average hourly earnings growth, which of course follows yesterday's surprisingly strong ULC increase for Q1 at 6.6% annualized. The Fed’s Harker said he sees steadiness in 'solid' latest job data.
- After a quick spike to 144.68, USDJPY quickly faded but the pair was subsequently well supported on a dip to 144.10. Fresh weekly highs then ensued, with the pair rallying as high as 145.09, essentially matching the initial target of the 50-day exponential moving average. The latest headlines/timeline on a US/China meeting has likely provided an additional tailwind, feeding into the cautious optimism surrounding global trade negotiations.
- 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.
- Elsewhere, adjustments for the likes of EUR, AUD, NZD and GBP are more reflective of the broader dollar index shift, with the Canadian dollar slightly outperforming following the above-expected Canadian employment data. USDCAD temporarily breached support on Thursday – trading below 1.3643 for the first time since early October last year. Below here, attention will be on 1.3579, the 1.5 Fibonacci projection of the Feb 3 - 14 - Mar 4 price swing, before the September lows at 1.3420 will garner attention.
- The most recent trend of a strengthening Mexican peso is prevailing as we approach the weekend. A close at current levels below 19.15 would provide another lowest USDMXN close for the cycle, bolstering bearish conditions following the significant range breakout in April. Potential is seen for an extension towards 18.7774, the 50.0% retracement of the Apr 9 ‘24 - Feb 3 bull leg, followed by the Aug ’24 lows around the 18.60 mark.
- Chinese CPI/PPI and trade data will take focus on Monday. US CPI is due Wednesday.
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US TSYS: Pre-FOMC Cross Asset Update
May-07 17:34
- Treasury futures are holding near midmorning highs ahead of the FOMC policy announcement at the top of the hour, curves running flatter with 2s underperforming: 2s10s -2.819 at 47.954.
- Tsy Jun'25 10Y futures currently +5 at 111-15 vs. 111-15.5 high, still well below initial technical resistance at 112-01.5 (High May 2). Support at 110-27.5 Low May 6 -- a clear break of this average would strengthen a bearish threat and expose 110-16+, Apr 22 low.
- Projected rate cut pricing looks steady to mildly lower vs. morning levels (*) as follows: May'25 steady at -0.5bp, Jun'25 at -7.3bp (-8.2bp), Jul'25 at -22.8bp (-23.8bp), Sep'25 -42.5bp (-43.8bp). That said, markets are still pricing in three 25bp cuts by year end.
- Stocks are off lows, the DJIA still outperforming (+375.0 at 41,204.2) after trading weaker the last couple sessions, SPX eminis +24.50 at 5650.25, Nasdaq has pared losses trades +1.30 at 17,690.96.
- Bbg US$ index firmer, inside session range (BBDXY +3.54 at 1219.88), Gold weaker (-46.16 at 3385.62), Crude weaker (WTI -0.70 at 58.39).
GBPUSD TECHS: Trend Structure Remains Bullish
May-07 17:30
- RES 4: 1.3605 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 3: 1.3550 High Feb 24 ‘22
- RES 2: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 1: 1.3444 High Apr 28 / 29 and the bull trigger
- PRICE: 1.3346 @ 16:34 BST May 7
- SUP 1: 1.3257 Low May 5
- SUP 2: 1.3245 20-day EMA
- SUP 3: 1.3041/3058 Low Apr 14 / 50-day EMA
- SUP 4: 1.2968 Low Apr 11
Recent weakness in GBPUSD appears corrective and the pair continues to trade inside a range with support at 1.3245, the 20-day EMA, intact. A clear break of this average would signal scope for a deeper retracement. Note that moving average studies remain in a bull-mode position, signalling a dominant underlying uptrend. A resumption of gains would open 1.3510, a Fibonacci projection.
US: Trump's Approval Rating Stabilises But Economy Remains Liability
May-07 17:23
Silver Bulletin has published a new detailed breakdown of President Trump's polling performance, noting that the economy is now a “liability” for the administration, despite a stabilisation of his approval.
- Silver notes: “As you can see, the issue approval pattern from Trump’s first term — when the economy was generally his strongest issue, but he was often fighting losing battles on the “culture wars” — has somewhat reversed. This time around, immigration is one of Trump’s least bad topics, although his numbers have nevertheless declined. However, the economy is a considerably bigger liability.”
- Silver adds: “Still, there’s been a slight rebound in Trump’s numbers over the past week. Might that be because he’s struck a more conciliatory tone on tariffs? The stock market has liked the change in vibes and maybe that’s improving voters’ mood, too. (We suspect that some voters may be relatively sensitive to stock prices.) That’s what this sort of data can help discern. As you can see in the chart, there’s been an uptick in his ratings on trade. And his economic approval has stabilized over the past couple of weeks.”
Figure 1: Trump Approval Rating
Source: Silver Bulletin
