US nonfarm payrolls rose by a staggering 304,000 jobs, blowing away the forecasts for a gain of 165,000. However, the increase in in the unemployment rate to 4.0% from 3.9% and lower than expected average hourly earnings more than offset the job gains. USDCAD fell through 200 day moving average support at 1.3125 and is probing additional support at 1.3100, ahead of the key 1.3050 area. AUDUSD and NZDUSD rallied as well.
Overnight, FX markets opened February with a case of the “jitters, despite Wall Street’s stellar performance in January. The DJIA was up 7.17% gain, S&P 500 rose 7.87%, and the Nasdaq rose 9.74%. Traders may have been wondering if it was too good too last and China Caixin January Manufacturing PMI didn’t help. (Actual 48.3 vs forecast 49.5 and December 49.7)
The angst about the China data was offset by somewhat positive news on the trade talks in Washington. President Trump speculated about a summit meeting with China President Xi Jinping, China reportedly is going to pass a law banning forced technology transfer, and China said they would increase purchases of US agricultural and energy products as well as industrial manufactured goods and services.
EUR
EURUSD opened the New York session near the top of its 1.1435-71 range and seemed to shrug off a series of mixed Manufacturing PMI data reports. German January PMI was weaker than expected at 49.7 (forecast 49.9), but Eurozone PMI was 50.5, as forecast. Eurozone inflation fell to 1.4%, y/y but that was expected. This mornings NFP report has pushed prices above the overnight peak, but just barely.
GBP
GBPUSD opened at 1.3055, near the bottom of its overnight range of 1.3145-1.3113. Prices were weighed down by soft PMI data (Actual 52.8 vs December 54.2) and concerns about a “no-deal” Brexit. Traders are ignoring today’s US data and looking ahead to more Brexit news and next week’s Bank of England policy meeting.
JPY
USDJPY was trapped in a 108.73-108.96 band but this morning’s payrolls data has encouraged buyers Soft US Treasury yields pressured the downside while the outlook for a dovish Fed provides support.
WTI
WTI oil prices plunged from their $55.31/b peak yesterday to $53.50 overnight. Month-end portfolio flows created a lot of the price volatility. Price pressures emerged after a report said that China’s major energy companies were increasing spending on domestic drilling.U
