Market Steady Ahead of the NFP’s, Euro Higher Into French Election

There were a couple of themes working their way through the market yesterday, the Usd has started today much lower with the Dxy down to 98.80 after trading up at 99.40 yesterday. But this can mostly be put down to the Euro’s (57% of the Dxy basket) move to the topside on the back of stronger polls backing a Macron victory in the French election.

Strong UK data (Services PMI 55.8 against exp 54.5) took the pound surging back to the topside after a nasty stop loss run through the support trend line kicked off the London session, once again confirming Cable as the most volatile major currency at the moment (Hold that thought until after this weekend maybe!)

Commodities also continued to take a hit with Oil now down to $45.50 a barrel, Gold to 1,230.00 and Silver to 16.3500. The commodity currencies have reacted accordingly and are under pressure, but perhaps not to the degree you’d expect and this is probably because of the huge event risk we have in the market over the next few sessions. Stock markets were very steady with Euro indices up on the back of the French polls (the CAC +1.35%) and the US market closing flat.

We’ve got the Non Farm Payroll Data later today in the US session and after the FOMC’s relatively Hawkish statement on Wednesday they will be hoping for a strong number to back up their rhetoric. We usually expect a relatively quiet day ahead of the NFP’s but with so much Geo Political event risk on the radar today could be the exception.

On top of this we’ve got the French election on the weekend and even though the polls widened again in Macron’s favour last night, traders memories of Brexit and the US election are fresh in their minds and they will be adjusting their strategies accordingly. We saw significant gapping on the Monday morning open after the preliminary French election result and trading desks are preparing for similar issues this Monday, with the greater risk now very much sitting with a surprise Le Pen victory and large downside for the Euro.

Before we get to the US session and Non Farms we have a couple of releases due in the other sessions, with the RBA’s Monetary Policy Statement due at 11.30 am and NZ’s Inflation expectations at 1.00 pm. Then, it’s a long wait to all the fun and games in the New York session with US Non Farms (exp 185k) and the Unemployment rate due at 10.30 pm. Once again, the Canadians are in on the act and will be releasing their employment data (exp 10k) at exactly the same time, just to make things even more interesting for the Cad traders out there!

Last but certainly not least we’ve got a number of FOMC members including the Fed Chair Janet Yellen speaking later in the US session which could just add something to the market as liquidity thins into the weekend.

Good Luck today and have a great weekend, if you have any questions or queries, please contact the team at info@sec.rakuten.com.au

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