North American Summary and Highlights 5 Apr
Overview - The USD rallied on a strong US employment report but erased most of its gains, though did end higher versus JPY and CAD, with weak Canadian employment data weighing on the CAD.
North American session
The US employment report was stronger than expected with a rise of 303k, with positive detail, as unemployment fell to 3.8% from 3.9% due to employment outpacing a strong rise in the labor force, a rise in the workweek and a 0.3% rise in average hourly earnings that was rounded down. The USD bounced, EUR/USD falling below 1.08 from near 1.0850, and USD/JPY rising to 151.75 from near 151.30.
However as the session continued the USD gains faded, despite Fed speakers Barkin, Logan and Bowman all sounding quite hawkish, either noting strong data or warning against near term easing. EUR/USD, GBP/USD and AUD/USD all ended up back near pre-data levels as equities advanced. USD/JPY remained above pre-data levels, near 151.60, with UST yields remaining higher.
Canada’s employment report with a 2.2k decline and rise in unemployment to 6.1% from 5.8% was weaker than expected. USD/CAD bounced to near 1.3650 from 1.3560 after the data before slipping back to near 1.3590, still above pre-data levels.
European morning session
A quiet pre-employment report European morning saw a minor risk recovery after the losses seen for the riskier currencies overnight. EUR/USD and AUD/USD both gained around 15 pips to 1.0840 and 0.6585 respectively, while USD/JPY and EUR/CHF also gained around 15 pips to 151.40 and 0.9785 respectively. USD/CAD and EUR/NOK also fell 15 pips and 3 figures respectively, reflecting the risk positive tone.
Datawise, we saw German factory orders which were a little weaker than expected at 0.2% m/m, but this was a minor miss after extreme volatility in previous months and had no impact. Eurozone retail sales were also slightly weaker than expected at -0.5% m/m, although back revisions meant the y/y decline was smaller than expected at -0.7%.