• US March non-farm payrolls +303K vs +200K expected
• Canada March employment -2.2K versus +25K expected
• US February consumer credit outstanding +14.12B vs +15.0B expected
• Fed’s Bowman: It is not yet time for us to consider cutting rates
• Bowman Q&A: Progress on lowering inflation has stalled
• Baker Hughes US oil rig count +2
• Fed’s Logan: It’s much too soon to think about cutting interest rates
• Hezbollah leader talks tough after Israeli strike on Iran’s consulate. Gold spikes
• White House’s Brainard: I think this is a very encouraging jobs report
• Fed’s Barkin: That’s quite a strong jobs report
• Tesla gives up on plans to build a low-cost car – report
• Italian central bank slashes 2024 inflation forecast in another sign of coming rate cuts

Markets:

• Gold up $33 to $2323
• WTI crude oil up 14-cents to $86.73
• US 10-year yields up 8.1 bps to 4.39%
• S&P 500 up 57 points to 5204
• USD leads, CAD lags

As we wind down the day, the FX changes are small but that doesn’t tell the whole story.

The US dollar jumped 40-50 pips on the non-farm payrolls report as the data and details were roundly hot. The only thing that kept the unemployment rate in check was a rise in the participation rate. Wages would also have been hotter if not for some rounding and a revision to the prior.

Despite that, equity future held in positive territory and that was a sign of things to come. The quirk was that yesterday there was a rout in risk trades late in the day on Middle East war fears and that began to unwind. With that, the dollar eventually gave back all it’s NFP gains and equities roared.

There was no lack of Fedspeak and certainly tilted more hawkishly but the market is still in a data-dependent mood. June Fed probabilities have dwindled to close to 50% and there are 65 bps in cuts priced this year compared to 70 pre-data. Bonds were also beaten up late in something to watch for the week ahead, especially with CPI on deck.

Perhaps though, the market is looking abroad where government spending is lower and inflation is falling back to target (or lower). The Bank of Italy slashed its inflation forecasts today and Canadian employment was surprisingly weak. The US appears to be more of an outlier and that means that once fiscal stimulus dries up, so will the outperformance. In the short-term that should be a USD tailwind but eventually that will reverse as the bill is paid.

As for the loonie, it fell to the worst levels of the year before bouncing in the broad USD slump later and with the help of new highs for oil.

This article was written by Adam Button at www.forexlive.com.

Canada’s jobs report showed a decline of 2.2K jobs in February, worse than the +25K reading expected. The headline is even worse than it looks when you consider runaway growth in Canadian immigration that led to a rise in the unemployment rate to 6.1% from 5.8%. That’s the highest since 2017.

„The cracks that had been slowly emerging within the Canadian labour market suddenly got much wider in March,“ writes CIBC. „By sector, weakness in headline employment reflected declines in accommodation & food services and retail &
wholesale, suggesting that the sluggishness in consumer spending is impacting hiring plans.“

They note that population grew by 91K in the month with the labour force up by 58K.

„With GDP expected to weaken in Q2 following the surprisingly strong start to the year, we
would expect to see further softening in the labour market with the unemployment rate peaking close to 6.5%. However,
interest rate cuts starting in June should bring a reacceleration in growth, which will help to stabilise the labour market in
the second half of the year and into 2025,“ CIBC writes.

The market is pricing in a 74% chance of a June 5 rate cut and 73 bps of easing this year.

This article was written by Adam Button at www.forexlive.com.

• Credit up $14.12 billion
• Prior 19.49B (revised to 17.68B)

Lending was a tad cooler in February so maybe there are signs that high rates are working? Those 14% rates on used car loans aren’t exactly enticing.

This article was written by Adam Button at www.forexlive.com.

Oil cooled somewhat into the close after hitting the best levels in five months an hour earlier.

I think those buying oil on a potential Iran-Israel war are taking an unnecessary risk in betting on an unknowable outcome. In general, the best trade is to fade war fears and that’s what the broader market did today. If there’s a war premium, it could come out on Monday.

In any case, this is the fourth straight week of gains for brent and the first close above $90. The $90 level is an important one because it’s an area where OPEC might start to bring some barrels back on. Now that’s not going to happen right away and there’s plenty of room for an overshoot but I would be wary of chasing $100.

This article was written by Adam Button at www.forexlive.com.

The Wirecard saga is one of the most-insane things to ever happen in financial markets.

It was the darling of the German stock market and when the FT started to poke around at signs of fraud, the German government banned short selling. In a journalism Hall-of-Fame moment, the reporters persisted and outed the company as a house of cards, leading to its collapse from a peak market cap of €24 billion.

That’s crazy enough.

But the FT is now reporting that COO Jan Marsalek — who is a fugitive and possibly living in Moscow — was a Russian spy. The allegation is that Wirecard itself was used as a shadow financial network to facilitate Russian undercover operations but not only that, Marsalek helped to facilitate spying operations.

That revelation certainly heightens the warnings and threats that FT journalist Dan McCrum faced, and allegations he was being spied on.

This is also an opportunity for me to post my favourite research note:

This article was written by Adam Button at www.forexlive.com.