MArket Roundup
• Smallest U.S. job gains in 7 months temper rate hike expectations; NFP 160k v 202k forecast 208k previous.
• US average earnings steady at 0.3%, workweek on target 34.5 v 34.4 previous; participation rate/U6 lower.
• Canada employment -2.1k v 0k forecast, unemployment rate steady at 7.1% v 7.2% forecast.
• Fed’s Dudley: Fed's Dudley says reasonable to expect two rate hikes this year (NYT).
• Oil rises 1% Baker Hughes sees rig count fall for the seventh week in a row to Oct ’09 low.
• Gold jumps after U.S. payrolls data misses forecasts.
• Barclays sees 1 Fed hike in ‘16, Blackrock sees 1 maybe none, Goldman/BofA expects next Fed hike in Sept.
• Brazil senate committee votes for Rousseff impeachment trial, president likely suspended from office next week.
• Brazil’s Barbosa: policies to fight inflation generating results, paves way for CVB rate cut in H2 ’16.
• S&P revises Turkey's sovereign credit outlook to stable; rating BB+.
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Looking Ahead - Economic Data (GMT)
• Sat --:-- China FX Reserves (Monthly) April forecast 3.20t, 3.21t- previous
• --:-- China Exports YY* April previous -0.1%, 11.50%- previous
• --:-- China Imports YY* April previous -5%, -7.60%- previous
• --:-- China Trade Balance USD Apr previous 40.00b, 29.86b- previous
• 00:00 Japan Overtime Pay Mar 0.40%-previous
• 05:00 Japan Consumer Confidence. Index Apr 41.7- previous
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
EUR/USD is likely to find support at 1.1370 levels and currently trading at 1.1401 levels. The pair has made session high at 1.1479 and hit lows at 1.1385 levels. Euro initially rose against the dollar after US employment data was released by US Labor Department. But, later it declined as remarks on possible rate hikes in 2016 from a top Federal Reserve official pared some bets on a weaker greenback spurred by news of slower than expected domestic job growth in April. New York Fed President William Dudley told the New York Times it was reasonable to expect the U.S. central bank would raise policy rates twice in 2016 despite data that showed domestic hiring fell to 160,000 in April, its lowest in seven months. The dollar index, which measures the greenback against six currencies, was last up 0.1 percent at 93.857. It had fallen as much as 0.6 percent earlier in the day.
GBP/USD is supported in the range of 1.4400 and currently trading at 1.4227 levels. It reached session high at 1.4546 and hit low at 1.4413 levels. Sterling slipped to 11- days low against the dollar on Friday as investors worried that a referendum on whether Britain should stay in the European Union was still too close to call, with seven weeks to go. Sterling had hit a day's high of $1.4544 after a weaker than expected U.S. jobs report showed just 160,000 jobs were added in April, well short of the 202,000 expected. But it later retreated to $1.4422, its weakest since April 25 and down 0.4 percent on the day. Average hourly earnings were the only bright spot in the employment report, rising 8 cents or 0.3 percent last month. For the week, the pound is down 1.2 percent versus the greenback, on track for its first weekly drop in four, having also been hurt by weak purchasing managers' index (PMI) surveys that showed Britain's economy slowed in April.
USD/CAD is supported at 1.2813 levels and is trading at 1.2905 levels. It has made session high at 1.2948 and lows at 1.2838 levels. The Canadian dollar declined to hit a two-week low against its U.S. counterpart on Friday as weak employment data and a raging wildfire in Alberta weighed on the country's economic outlook. The Canadian labor market stalled in April, leaving the unemployment rate unchanged at 7.1 percent, while job losses in Alberta showed the province was continuing to struggle with the fallout of cheaper oil. The Canadian dollar strengthened against the greenback immediately after the data, but slipped back after US dollar strengthened across the boards following rate hike comments from Federal Reserve’s William Dudley.
USD/JPY is supported around 106.12 levels and currently trading at 107.09 levels. It has made session high at 107.23 and low at 106.40 levels. The pair declined immediately after the release of US jobs data to hit low at 106.46 levels. But rebounded soon after as investors noted the wage data, which showed average hourly earnings rose 0.3 percent in April after a weak reading for March. That countered the headline figure, which showed only 160,000 new jobs were added last month, the smallest increase since September and more than 40,000 fewer than economists' expectations. Nonfarm payrolls increased by 160,000 last month, far below the 202,000 analyst’s expectation. April's job gains were the smallest since September and below the first-quarter average job growth of 200,000. The greenback was 0.1 percent lower against the yen at 107.12 yen. Friday's decline snapped a three-day winning streak in which it retraced from an 18-month low of 105.55 struck on Tuesday.
Equities Recap
European shares closed mix on Friday, with steelmaker ArcelorMittal and hedge fund Man Group among the worst performers.
Britain's blue-chip FTSE 100 index closed up by 0.2 percent, France's benchmark CAC-40 index closed down by 0.40 percent, Germany's DAX ended up 0.2 percent, meanwhile the pan-European Eurofirst 300 index was down by 0.33 percent.
U.S. stocks rebounded from early losses to close higher on Friday as investors viewed the day's jobs report as less disappointing than first thought.
Dow Jones closed up by 0.45 percent, S&P 500 ended up by 0.32 percent, Nasdaq finished the day up by 0.40 percent.
Treasuries Recap
U.S. Treasury yields rose on Friday after April's U.S. employment report showed signs of wage growth for American workers, an early sign that inflation may finally be strengthening, and a top Federal Reserve official said raising U.S. interest rates twice this year was still a possibility.
Benchmark 10-year yields, which move in the opposite direction of the bond's price, fell to 1.705 percent earlier on Friday, their lowest since April 11. Since reversing that move, though, the price was last down 9/32, with the yield ticking up to 1.781 percent.
Commodities Recap
Gold jumped 1 percent on Friday after U.S. non-farm payrolls data for April came in weaker than expected, boosting expectations the Federal Reserve will delay further interest rate increases.
Spot gold hit a high of $1,295.70 an ounce after the data and was up 0.8 percent at $1,287.51 an ounce at 2:48 p.m. EDT (1848 GMT). U.S. gold futures for June delivery settled up 1.7 percent at $1,294 an ounce.
Oil prices edged up on Friday, supported by an early dip in the dollar and a wildfire that has shrunk Canadian oil sands crude output by a third, but Brent still ended with its sharpest weekly drop in four months as investors cashed out of April's big rally.
Brent crude futures settled up 36 cents, or 0.8 percent, at $45.37 a barrel. West Texas Intermediate (WTI) futures finished up 53 cents, or about 0.8 percent too, at $44.66.
