• 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.

Headlines:

Switzerland March foreign currency reserves CHF 715B vs CHF 678B prior

Japan’s PM Kishida to Take Appropriate Action if There are Excessive FX Moves

German Factory Orders 0.2% m/m vs 0.6% expected

ECB Likely to Start Cutting Rates Once a Quarter Starting June

UK Construction PMI 50.2 vs 49.8 Expected

Eurozone Retail Sales m/m -0.5% vs -0.3% expected

Markets:

EUR/USD is uneventful after the German data, but US jobs print is expected.

GBP/USD didn’t react too much after better than expected Constructions PMI.

USD/JPY is range bound as Japan PM Kishida said what we already know.

Geopolitical risks loom over the weekend.

This article was written by Gina Constantin at www.forexlive.com.

Yesterday,
the Nasdaq Composite finished the day negative as we got a huge selloff late in
the day. The catalyst was attributed to the news of a possible Israel-Iran conflict which triggered risk off flows and the algos did
the rest to exacerbate the move. If that’s really the case, the market will not
want to be long risk into the weekend, so we might see some more weakness today
or at least a consolidation. A lot will also depend on the US NFP report today as
strong data across the board, especially on the wage growth side, could put
even more pressure on the price heading into the US CPI next Wednesday.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the
daily chart, we can see that the Nasdaq Composite has been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. The price recently broke out of the rising wedge and after
a brief bounce on the key 16206 level where we had the red 21 moving average for confluence, the
market sold off yesterday falling below the critical level. The technicals have
now turned bearish.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price bounced on the 16206 level where we had also the 61.8% Fibonacci
retracement level for confluence and eventually
reversed and fell into new lows. The target should now be the 15929 level where
the buyers will likely step in with a defined risk below the level to position
for a rally back into new highs. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets into the next support
at 15453.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the strong bounce on the key 16206 support zone
and then the complete reversal yesterday into the close. The catalyst for the
selloff was attributed to the news of a possible Israel-Iran conflict, which
triggered risk off flows. There’s not much else to glean from this chart and
the market will look forward to the US NFP report today for the next move.

This article was written by FL Contributors at www.forexlive.com.

While both the Fed and the BoC are expected to start cutting interest rates sometime this year, some analysts expect the BoC to potentially open the door for a June rate cut due to the rising unemployment rate caused by migration coupled with an inflation cooldown.

The Bank will want to avoid the risk of a potential recession and might adopt a more dovish message at the next meeting if it’s confident enough that inflation is on its way to the 2% target, even though the monetary policy is expected to remain unchanged for now.

If the payroll data prints under expectations in both Canada and the U.S. today, the CAD could weaken against all G10 pairs.

On the H1 chart USD/CAD rejected from the 1.3575 level of resistance and is currently on a correction path. The next resistance level is at 1.3610 and on the downside the support levels are at 1.3520 and 1.3460.

This article was written by Gina Constantin at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• Fed Chair Powell maintained a neutral stance as he said that it was
  premature to react to the recent inflation data given possible bumps on the way
  to their 2% target.
• The US CPI and the US PPI beat expectations for the second
  consecutive month.
• The US Jobless Claims yesterday missed expectations slightly
  although Continuing Claims improved.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Consumer Confidence missed expectations although the labour
  market details improved.
• The market still expects the first cut in June, but
  the probability stands at just 60%.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations by a big
  margin.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI falling
  further into contraction while the Services PMI continue to increase and remain
  in expansion.
• The
  market expects the first rate cut in August.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD eventually
bounced around the key 0.65 support zone and
rallied all the way back to the key resistance at 0.6623. The sellers stepped
in with a defined risk above the resistance to position for a drop into the
lows. The buyers, on the other hand, will want to see the price breaking higher
to start targeting the next resistance around the 0.69 handle.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that as soon as the
price broke out of the falling channel, the buyers piled in strongly supported
by the disappointing US ISM Services PMI and pushed the price back into the
resistance. We now have a strong support zone around the 0.6560 level where we
can find the confluence of the
previous swing high level, the red 21 moving average and the
38.2% Fibonacci retracement level.
This is where the buyers stepped in with a defined risk below the support to
position for a rally into the resistance targeting a breakout. The sellers, on
the other hand, will want to see the price breaking lower to increase the
bearish bets into new lows.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the bounce today on the support zone. We now
have some resistance around the 0.6590 level where we can find the confluence
of the red 21 moving average and the 50% Fibonacci retracement level. This is
where the sellers might step in with a defined risk above the Fibonacci level
to position for a break below the 0.6560 support with a better risk to reward
setup. A lot will depend on the US NFP report today as strong data across the
board will likely trigger a strong selloff in the pair.

Upcoming Events

Today we conclude the week with the US NFP report.

This article was written by FL Contributors at www.forexlive.com.

Prior 0.1%.

Retail sales y/y -0.7% vs -0.7% expected, prior -1.0%.

The retail sales for the euro area printed below expectations, but the EUR remains steady as everyone is expecting the US jobs data.

Here is the breakdown of volume of retail trade for March:

This article was written by Gina Constantin at www.forexlive.com.