FX Trader, Loonieviews.net
The US nonfarm payrolls report underwhelmed. The expected forecast-beating result was somewhat disappointing. (Actual NFP 157,000 versus a forecasted 190,00). Fortunately, unemployment dipped to 3.9%, matching predictions and providing damage controlfor the headline number.
The US trade deficit widened, and according to the Wall Street Journal, it did so at the fastest pace since November 2016. If anything, the news will irritate President Trump. China will annoy the President further as well, as Beijing is planning to slap tariffs of between 5% and 25% on a range of US imports.
FX markets reacted predictably to the US data. EURUSD popped to 1.1609 from 1.1570, GBPUSD jumped from 1.3002 to 1.3042 and USDJPY dropped to 111.38 from 111.60. The US dollar has recovered somewhat against the European currencies, but not against the yen.
The Canadian dollar got a double dose of good news. Canada’s trade deficit narrowed to a mere $0.63 billion, well below the forecast of a $2.3 billion deficit. The icing on the cake was the 4.1% increase in exports to $50.7bn, a record high, and the first time they have been above the $50bn mark. USDCAD was unable to break outside this week's 1.2975-1.3050 range.
Wall Street futures indicate a flat opening this morning.
The US dollar managed to rally against all the G-10 majors since last Friday’s New York close. The only exception was the Canadian dollar which managed a 0.55% gain (as of 13:00 GMT) The Swiss franc was unchanged. The week ahead will be lacking in some of the drama and excitement seen in this week; there are only two central bank meetings, the Reserve Bank of Australia and the Reserve Bank of New Zealand. Neither bank is expected to deviate from their dovish interest rate policies. China trade data will be a key focus, at least for the Antipodean currencies. Canada is closed on Monday.
USDX rangebound
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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