Key overnight events:
- US nonfarm payrolls in April rose 160,000 in April, less than the 200,000 increase predicted and March’s increase of 208,000. Unemployment rate remained steady at 5.0%, higher than the 4.9% consensus. However, average hourly earnings rise 2.5% year-on-year, beating the expected 2.4%. The poorer-than-expected jobs report has sparked speculation among analysts that a June Fed hike might now be off the table.
- The Fed’s New York President Bill Dudley said the soft jobs data numbers shouldn’t derail two hikes this year. His comment were echoed by influential bond investor Bill Gross, chief economic adviser at Allianz SE – Mohamed El-Erian and Mark Kiesel from PIMCO.
- The S&P 500 Index ended Friday 0.3% higher, paring some of its losses for the week to end the week down 0.4%. Materials, industrial and consumer staples/discretionary sectors outperformed on strong commodity prices and wage gains in the payrolls report. Strength in the US dollar persisted, with the Bloomberg Spot Dollar Index advancing 1.7% for the week.
- WTI futures expiring in June rallied as much as 2.9% this morning in Asian trading hours as Canadian wildfires continue to spread; oil output has been cut by about 1 million bpd. Saudi Arabia has replaced its long-time oil minister, in a move that’s seen as dimming prospects for an OPEC output freeze.
- China’s April exports fell 1.8% year-on-year, worse than the 0.0% expected, while imports fell 10.9%, poorer than the 4.0%-decrease expected. China’s trade surplus widened to US$45.6 billion, from US40.0 billion. FX reserves rose for a second month by US$6.4 billion to US$3.2 trillion.
- The Bank of England has asked banks to prepare for potential rate cut if Britain leaves the EU, the Sunday Times reported.
- Spot 1.3638
- USDSGD extended its weekly advance of 1.3% from last week by another 0.2% today to a session-high of 1.3643, taking out the 50-day moving average of 1.3615 in the process.
- Spot 0.7362
- AUDUSD capped off a losing week on Friday, closing 3.1% lower for the week.
- The currency pair has broken back below the 0.7385 level, and is currently being supported by the 100-day moving average of 0.7333.
- Inflation projections from RBA’s statement on monetary policy on Friday have set the scene for a June cut and left the door open for another cut thereafter, most likely in August, according to a note from BNP Paribas.
- Spot 1.2924
- Net change employment in April fell by 2,100, missing the consensus estimate of an increase by 1,000, and slowing from last month’s 40,600-increase in jobs. Unemployment rate remained steady at 7.1%, lower than the expected 7.2%.
- USDCAD rounded off Friday with a weekly gain of 2.8%, and climbed further today by as much as 0.4% higher to 1.2960. The previous resistance of 1.2832 has been broken, and the next one comes in the form of the 50-day moving average of 1.3010.
- Spot 6.5173
- After gaining about 0.5% last week, USDCNH remains largely unchanged today as the PBOC set its reference rate higher for the first time in four days.
- According to Bloomberg reports, analysts’ consensus is that China is less likely to ease monetary policy later this year despite disappointing trade data over the weekend, with FX reserves continuing to stabilize and inflation showing resistance.
- Spot 8.1929
- USDNOK recorded its best weekly advance since the first week of this year, climbing 1.9% to 8.2060 on Friday, before retreating back below the 8.2000 handle today.