Morning brief for May 3

Morning brief for May 3

2019-11-11 • Updated

Kiwi was the biggest mover in the last trading sessions. NZD/USD spiked to 0.6970 from 0.6930 after global dairy trade auction prices rose by 3.6% and whole milk powder advanced 5.2% (the markets expected a flat outcome, instead they received upbeat prints). The BZ commodity price index is truly steady this year. This supports NZD. Earlier today we got a really strong NZD quarterly job gains and jobless rate. Kiwi/US dollar jumped on the release, but then ran into sellers and lost its steam, having slid to 0.6950.

Aussie slumped to 0.7505 following the kiwi’s lead. Warnings in the Chinese press on liquidity and stock market jitters are pressuring Australian currency. The People’s Bank of China weakened the yuan earlier today and injected a relatively large amount into money markets. AUD can still hit a significant resistance at 0.7600. Only a break of 0.7480 would indicate that the positive undertone disappeared.

USD/JPY is trading steadily above 112.00. The pair has a room for extension towards 112.80. But the current upward moment is not really strong. The markets today expect the ADP employment report to post 175K in April. Last time, the private gauge was a terrible predictor for the official payrolls number (a great divergence between private and official figures has been registered).  Despite this last month deviation, the ADP outcome will be a market trigger. Also, there will be the FOMC meeting at 9:00 pm MT time. No change is widely expected. Any comments on the Fed’s intentions to trim its balance sheet won’t be supportive for the USD.

EUR/USD is trading in the tight range of 1.0850 – 1.0950 levels. To restore the uptrend the euro should break 1.1000. At the present moment, we see the upward momentum rapidly waning. A dovish rhetoric of the Fed’s policymakers will likely be supportive for the euro. Today, markets will be waiting for some Spanish, German unemployment changes and Eurozone preliminary GDP for this first quarter. The latter one is expected to be a euro-friendly. Note too that there will the French presidential debate between Macron and Le Pen at 9:00 pm MT time.

The British pound was one of the strongest outperformers against the greenback overnight. It was boosted by stronger than expected manufacturing PMI. Today market will focus on the US construction PMI. Maybe, this PMI will also be positive for the pound. If it was the case, GBP would be able to break 1.3000 and rise higher.

USD/CAD traded a few points higher in today’s session. The CAD’s underperformance coincided with a drop in oil prices. 

Brent oil futures tumbled on concern that increasing US crude production might offset efforts by the OPEC members to eliminate global oil glut.  Crude oil dropped even lower after Saudi Arabia signaled it’s faring better that expected with low prices (whether they need additional cuts, then? This the questions investors might have asked following the announcement).



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