9 Apr: Uninspiring NFP weighs on US$, yields. Stocks dive on trade war fears. US CPI this week’s focus.

By | April 9, 2018

 

US stocks dived on Friday, with the S+P and DJI both down by around 2.2%, as growing tensions between the US and China exacerbated investor fears of an all-out trade war, with the deepest declines among companies that stand to suffer most from an escalation in protectionist trade policies, such as big industrial manufacturers like Boeing and Caterpillar.

The dollar was slightly softer as well, underwhelmed by the US unemployment data which came in much weaker than expected at only 103k growth in March, versus expectation of 189k. February’s figure was revised up from 313k to 326k and the headline unemployment rate remained unchanged at 4.1% versus expectation of 4.0%. In slightly more positive news, the average hourly earnings rose 0.3% mm, meeting expectation. The dollar also received no help from US yields which headed lower (10 Year @ 2.77%), as traders questioned how many times the Fed will actually need to lift rates this year. Right now 3-4 hikes would seem excessive although Fed Chairman Jerome Powell stuck closely to the documented script on the economic outlook on Friday, sketching a picture of gradual interest-rate hikes ahead, while at the same time saying that it is too soon to know if the trade issue will take a toll on the US economy, which has been steadily strengthening.

The metals made some minor gains on the back of the softer dollar, while WTI fell 2.3% due to traders exiting long positions amid the escalating US/China trade tensions, and also not helped by the U.S. oil rig count, wheich jumped to a three-year high adding to downside momentum. Baker Hughes indicated that the number of oil rigs operating in the US rose by 10 to 808, the highest level since March 27, 2015.

The coming week will be fairly thin with regards to the economic calendar.  The highlights of the week will be the March, Chinese and US CPI (Wed), the ECB Minutes (Thur) and the German CPI (Fri). Other points of interest will be EU Sentix Investor Confidence Survey (Mon), US PPI, Business Inventories (Tue), UK Manufacturing/Industrial Production & Goods Trade Balance (Wed), and the RBA Financial Stability Report and both the China and EU Trade Balance (Fri).

 

CURRENCIES
EURUSD: 1.2280
Res  1.2290  1.2315  1.2345
Sup  1.2250  1.2215  1.2170
USDJPY: 106.95
Res  107.50  107.15  107.70
Sup  106.75  106.40  106.00
GBPUSD: 1.4087
Res  1.4105  1.4140  1.4175
Sup  1.4060  1.4030  1.4000
USDCHF: 0.9590
Res  0.9610  0.9630  0.9650
Sup  0.9580  0.9565  0.9550
AUDUSD: 0.7674
Res  0.7725  0.7700  0.7755
Sup  0.7660  0.7640  0.7625
NZDUSD: 0.7272
Res  0.7300  0.7320  0.7350
Sup  0.7245  0.7220  0.7185
INDICES / COMMODITIES
S&P: 2605
Res  2630  2655  2680
Sup  2585  2550  2525
DJI: 23914
Res  24100  24300  24450
Sup  23695  23545  23305
ASX SPI: 5736
Res  5750  5770  5795
Sup  5705  5725  5685
XAUUSD: 1333
Res  1340  1345  1355
Sup  1325  1320  1315
XAGUSD: 16.36
Res  16.45  16.55  16.65
Sup  16.30  16.20  16.10
WTI: 61.90
Res  62.60  63.45  64.20
Sup  61.40  60.65  59.95