Daily Market Pulse

USD

Today's key Nonfarm payrolls (NFP) report for March has gained some added spice, given the weaker data that preceded it. Both the latest JOLTS and ADP reports have shown signs of moderating. Despite the concerns, Nonfarm payrolls beat expectations by adding +236,000 jobs while unemployment fell to 3.5%. The Fed is receiving mixed signals regarding the next rate decision next month. In the meantime, a weaker dollar persists, with the dollar index (DXY) falling by around 0.75% so far this week. Considering the data release reactions and the holiday-thinned market, this week's final destination for the dollar remains uncertain.

EUR

It has been another solid week for the single currency. A more robust economic outlook has buoyed the positive moves for the EUR. Amongst the beats, German manufacturing is showing strong signs of recovery, coupled with healthy PMI data throughout the region. EUR/USD has rallied by over 0.7%, moving ever closer to the previous cycle high. Aside from today’s NFP, next week will be dominated by key inflation and Retail Sales data in the region. 

GBP

With more critical economic data (GDP, Halifax House Prices) helping the pound to maintain recent gains, sterling goes into the long Easter weekend in fine shape. Indeed, GBP/USD could finish the week at its highest close since last June. The US NFP and any position squaring may still impact the pair before today’s close, so sterling bulls still need to be cautious. 

JPY

Retiring BoJ governor Kuroda gave a final farewell speech on Friday. He spoke of Japan making steady progress toward sustainability and steadily achieving the BoJ’s price target. He suggested that it is possible to exit from (the BoJ’s) ultra-easy policy while ensuring the financial system remains stable. Interestingly enough, the yield on Japan’s key 10-year JGB has now crept back up toward the BoJ’s ceiling price of 0.5%. Any further increases may require further intervention from the BoJ. USD/JPY has dropped by around 1.15% this week, driven broadly by the weakening dollar. 

CAD

The latest Canadian employment report was reasonably solid. The overall unemployment rate remains at a healthy 5%, with expectations to have increased to 5.1%. There was also a beat on the headline change, with 34.7K positions added through March. Markets had been expecting a much smaller increase of 12K after last month’s 21.8K gain. The only slight miss came from the participation data, which dipped from 65.7% to 65.6%. Having slipped to a two-month low earlier in the week, USD/CAD is now reasonably flat overall. That slight decline in the Loonie may be aided by a dip in oil prices over the past few days. 

MXN

Having slipped by over 4% over two weeks, USD/MXN has staged a worthwhile recovery this week. The pair has rallied by over 1% as we approach the crucial NFP report. With little Mexican news scheduled, USD/MXN is likely to take its directional bias from the dollar side of the pair.  

BRL

Unlike the Peso, the Real has maintained recent strength despite substantial gains. Indeed, USD/BRL slipped over 3.7% over the past two weeks and remains roughly flat this week. In other news, Brazilian President da Silva met with ministers yesterday, using the opportunity to suggest that Brazil will soon return to growth and job creation.