The US$ briefly reached its highest levels this year against most pairs on Friday, despite the somewhat disappointing employment data for April, before dropping back to trade little changed on the day. The DXY reached a high of 92.90 before closing the week at 92.55, but above the 200 DMA for the first time since May 2017.
The US employment report showed that job growth increased less than expected in April, by 163K as opposed to the expected 195K, although the previous month’s figure was revised up from 103k to 135k. The headline unemployment rate dropped to 3.9%, down from 4.1% and beat expectation of 4.0%, making it the lowest level since late 2000, but the wage growth disappointed. Average hourly earnings rose by just 0.1% mm, down from 0.3% last month and missed expectation of 0.2% mm. Elsewhere in the currency markets, Sterling had another tough session as it erased all its gains for 2018, briefly falling back below 1.3500 but ended the day unchanged. Other currencies were choppy but mostly unchanged although US$Chf finished at parity for the first time in 6 months. In other markets, US stocks closed up by around 1.2/1.4%, while the metals are slightly higher. WTI finished the week on a strong note, up by 2%, just under $70.00 pb, at a 3 ½ year high as traders increased bets the US will pull out the Iran nuclear deal next week, raising the potential for tighter global crude stockpiles.
The coming week will see Interest Rate Decisions from the BOE and from the RBNZ. No changes are expected from either but Sterling is likely to remain volatile given the previous expectations of a May rate hike, now off the agenda following the recent spate of soft UK data. Otherwise it will be mostly a rather thin calendar this week, with the main focus being on inflation readings to come from China and from the US, both due on Thursday. Monday is going to be quiet, with most interest likely to follow on from Friday’s US Jobs report. Other points of interest will be the Australian AIG Performance of Construction Index, ANZ Job Ads, NAB Business Conditions/Confidence – Apr and the China Foreign Exchange Reserves. There is not much at all to come from the EU or the US, and it is a UK Bank Holiday on Monday. Have a good week.
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