US AM Digest: NFP report misses expectations, while the US ups the trade war ante

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NFP Report: The headline figure heavily missed expectations at 103k vs. Exp. 185k, however, this had been met with upward revisions to 326k from prior 313k. As has usually been the case, much of the focus had been placed on the wage components which printed in-line with consensus at 2.7%, while the unemployment rate held steady at 4.1%. Subsequently, the initial move lower in the USD-index had been quickly retraced, given that the release is unlikely to alter the current near-term path for Fed monetary policy.

Trade Wars: Aside from today’s US jobs numbers, reports late yesterday noted that Trump ordered US trade representatives to consider USD 100bln in additional Chinese tariffs. Reason being, the United States proposed 25% tariffs on USD 50bln worth of Chinese imports, representing 10% of Chinese exports to US. However, equivalent proposals by China represents 38% of US exports to China. This may also be an attempt by the Trump administration to increase their bargaining power during negotiations.

CAD: Strong gains for the Loonie after encouraging jobs data, employment change at 32.3k vs. Exp. 20k, with this led by full time jobs (68.3k), suggesting improved quality of jobs. The double-bottom at 1.2740 curbing further downside in USD/CAD for now.

EUR: Uninspiring data from the Euro-Area’s largest nation, Germany, continues to point towards a moderation in Eurozone growth. German industrial production fell 1.6%, compared to expectations of a modest 0.2% rise, while Construction PMI dropped into contractionary territory. Subsequently, EUR has been trading slightly heavy, as such, EUR/USD has moved towards the lower end of its 1.2250-1.2150 range (Last trade 1.2270).

AUD/NZD: The Kiwi among today’s worst performing G10 currency having failed to hold 0.7300, which in turn has seen NZD back down to the mid-72s. Another contributing factor has been short squeeze in AUD/NZD which now hovers around 1.06 after failing to close below 1.0550. Subsequently, this has provided some much-needed reprieve for AUD, however, selling interest lurks amid the persistent trade spat between the US and China.

DailyFX Economic Calendar: Friday, April 06, 2018 – North American Releases

With the major economic data now out of the way for North American participants, focus now switches to key central bank speakers with Fed Chair Powell to comment on the economic outlook. Many will also be looking out for his views on the potential threat of a trade war. As a reminder, at his first press confenrence as Fed Chair, Powell noted that a number of member did bring up potential issues of tariffs.

DailyFX Webinar Calendar: Friday, April 06, 2018

IG Client Sentiment Index Chart of the Day: USDCAD

USDCAD: Retail trader data shows 40.3% of traders are net-long with the ratio of traders short to long at 1.48 to 1. In fact, traders have remained net-short since Mar 29 when USDCAD traded near 1.28945; price has moved 1.1% lower since then. The number of traders net-long is 0.3% lower than yesterday and 6.3% lower from last week, while the number of traders net-short is 4.1% lower than yesterday and 33.2% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USDCAD trading bias.

Learn more about the IG Client Sentiment Index on the DailyFX Sentiment page

Four Things Traders are Reading

  1. NFPs Cool in March at 103k Versus 326k in February; USDCAD Plummets 0.5%” by Dylan Jusino, Market Analyst

  2. Charts to Watch – USD Index, Euro, GBP/USD, Dow & More
    by Paul Robinson, Market Analyst
  3. S&P 500 & Dow Jones Technical Outlook: Big Top & Drop in the Cards” by Paul Robinson, Market Analyst
  4. S&P 500 Recovery Lacking Drive, Can EUR/USD Finally Break its 3 Month Range?” by John Kicklighter, Chief Currency Strategist

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