Thursday May 6th, 2021

Oil prices are steady while the US$, US yields and equity markets are weaker as markets await the US Initial Jobless claims. Initial jobless claims at 8.30am est with markets expecting 540k vs 553k previous week and the results will set the tone for Fridays NFP data. The Fed will release its financial stability report today at 4pm est, after the Fed Chair called the risks emanating from “Frothy” stock prices and other potential financial imbalances as “manageable”. India sees covid cases hit a record 412k new cases today as the virus spreads from cities to villages in the worlds 2nd most populous country. The US and EU supports giving poorer countries access to covid-19 vaccine patents as the covid global health crisis increases. Sino/Western tensions remain high as China condemns the G7’s “Interference”, “Smears” on human rights. 

In the currencies AUD initially weakened after China said it would stop its economic dialogue with Australia. Norway sticks with its outlook for a 2021 rate hike as its economy opens. The US$ remains under pressure from the Feds continued dovish message, if the US$ Index breaks 90.600 we could see US$ retest 89.53 – 2021 lows. CNY and Asian currencies are flat on average vs US$. Trading currencies are steady ahead of the US jobs data with AUD, NZD & JPY are flat, MXN & NOK, edge higher up 0.2%, while ZAR rallies 0.7% vs US$. Intraday Jobs data will be the markets primary focus and, in the afternoon, focus shifts back to the FED. 

Oil prices continue to remain firm as they balance covid surges globally vs US & EU economic optimism and falling US inventories. India the words 3rd largest oil consumers posted record covid cases and will likely to continue to cap oil prices. C$ tests a fresh 3-year high at 1.2236 as oil prices hold and US$ continues weaker. Momentum favours C$ but markets may wait until Fridays US NFP for fresh incentive to take the US$ weaker. Support (Key) at 1.2235, if breached look for 1.2057 (Sep2017) while resistance remains at 1.2360. 

Eur holds above 1.20 as markets await US jobs data. EU vaccinations hit 30% of its citizens getting their 1st vaccination and is providing support to the euro. A lot of ECB speech today with De Guindos, Schanabel and President Laguard are all speaking today. French/UK tensions rise over ongoing fishing rights disputes and sends two patrol boats the Channel Islands. France expands its vaccinations down to 16-year-olds. US Jobs data will be key for Euro direction today. Support holds 1.1975 and resistance at 1.2085.

EURGBP rebounds as UK/France fishing tensions rise. Analysts remain bearish Eur looking for a potential move towards 0.83 (1.2048) vs GBP into H2/2021. Support holds to .8585 (1.1650) with resistance remaining at .8700 (1.1495).

GBP breaks above 1.39 on a weaker US$ and a flurry of domestic activity. The BOE meeting today with no change expected in rates or QE, but markets think things will change at the next meeting. It is also the Scottish elections today and will this lead to a second independent vote. UK Service sector PMI in April grows at its fastest pace since 2013. Brexit tension rise on the French/UK fishing issues escalate as France suggested it could cut power to the Channel Islands and the UK sends two navy ships to Jersey to protect the waters against French fisherman. Markets will continue to monitor US jobs data and BOE for intraday direction. Support at 1.3850, while resistance sits at 1.3950.