Key overnight events:
- US May non-farm payrolls added 38,000 jobs, well below the expected 160,000, registering its lowest print in 5 years; April’s gain was revised down from 160,000 to 123,000. The odds for a Fed hike fell to 27% in July, down from 55% the previous day.
- The unemployment rate fell from 4.9% to 4.7%, the lowest since November 2007, primarily due to the fact that 458,000 Americans gave up search for work. Wage growth was the only positive of the report, as average hourly earnings of private-sector workers rose 0.2% month-on-month, and 2.5% year-on-year.
- Factory orders in April rose 1.9%, matching expectations, its fastest pace in six months. The US trade deficit widened 5.3% month-on-month, as exports rose 1.5% compared to an increase of 2.1% for imports.
- The S&P 500 Index slid 0.3%, recovering from a drop of 1.0% earlier in the day. Utilities and phone stocks led gainers as the prospect for lower rates sent investors searching for shares that have large payout ratios; raw material shares also advanced. The Bloomberg Dollar Spot Index fell 1.5%, the steepest decline since 3rd Feb.
- Crude oil futures expiring in July fell 1.1% to $48.62/bbl despite the number of rigs drilling for oil in the US rising for only the second time this year.
- The Fed’s Brainard, a permanent voter on the committee, reiterated a cautious tone post-NFP, commenting that a “sobering” US employment report suggested the labor market has slowed as she continued to warn against moving too quickly to raise interest rates. Meanwhile, Cleveland Fed President Mester said the Fed should raise interest rates gradually despite weak jobs data.
- Spot 1.3620
- USDSGD declined 1.4%, extending its drop for the week to 1.6%, on the back of heavy weakening of the US dollar overnight.
- The currency pair has pared back some of its losses today, recovering up to 0.4% and back above the 50-day moving average of 1.3610.
- Spot 0.7325
- AUDUSD jumped 2.1% to 0.7367 following Friday’s weak NFP numbers, closing above its 100-day moving average for the first time in more than three weeks.
- The RBA releases its cash target rate tomorrow and is expected to stand pat at 1.75%, the last RBA meeting before the national elections next month.
- Spot 1.2971
- The Canadian dollar strengthened 1.3% to 1.2937 against the US dollar on Friday, reversing losses and gaining 0.7% for the week against the greenback.
- The currency pair continues to be supported at its 50-day moving average for the second time in two weeks.
- Bank of Canada Governor Poloz said on Saturday about half of the expected damage to Canada’s economy from the Alberta wildfires was caused by lost crude production, which should bounce back once energy producers resume operations.
- Spot 6.5659
- After dropping 0.70% on Friday to 6.5421, USDCNH pared some losses by rebounding up to 0.40% earlier today.
- The PBOC set its reference rate 0.5% stronger, compared with a 1.5% drop in the Bloomberg Dollar Spot Index on Friday. The weaker-than-expected fixing spurred speculation that the Chinese authorities still possess a weakening bias in the yuan.
- Spot 8.1796
- USDNOK declined 1.9% to 8.1730, falling back below the 50-day moving average.
- The next key support comes in at the 8.0000 handle.