Friday May 7th, 2021

The US$ dips, oil prices are flat, equity markets are mixed and US yields inch higher ahead of US Nonfarm Payrolls data today. NFP expectations range widely from 700k all the way out to 2mio, with most economists are expecting 1 million new jobs were added in April. Thursday, Fed Brainard warns of hidden leverage within the financial system, saying “asset prices may be vulnerable to significant declines should risk appetite falls”. Treasury Secretary Yellen will join President Biden at a WH press briefing today discussing the Jobs data, markets will be looking for possible comments from the Treasury Secretary on inflation or interest rates. India suffers another 400k new virus case day, pressing the US support for covid patent waiver which is expected to intensify talks within the WTO. Globally commodity prices continue to rally with Copper hitting its all-time highs today. China’s global exports surges 32.3% y/y, with imports growing by 43% y/y. CNY advances 0.15%, while Asian currencies strengthen 0.2% on average vs US$. Trading currencies are mixed with JPY & NOK are down 0.05%, AUD, ZAR & MXN are Flat, while NZD strengthens 0.2% vs US$. Intraday US NFP will be the primary driver for market direction today. 

Oil prices are rebounding from overnight lows and is set for another weekly gain as global economic optimism continues to drive oil prices higher despite surging covid cases in India. The US is the worlds largest oil consumer and as optimism grows for its economy recovery expect oil price to remain firm. C$ hits a fresh 3 ½ year high at 1.2141 vs US$, as C$ strengthens from surging commodity prices. C$ volatility is expected to continue today as markets await both US and Canadian jobs data today. With the current strength of global commodities look to sell US$ into any intraday rebounds as moment continues to favour a stronger C$ scenario. In Canada focus will be on Cad Unemployment rate, Participation Rate, Net Change in Employment, and Ivey PMI data will be released today. Support (Key pivot) at 1.2057 (Sep2017) with resistance dropping to 1.2270.

Euro strengthens amid hawkish ECB comments and a weaker US$ pre-NFP. A flurry of positive ECB comments focusing on economic optimism for the EU as countries reopen and vaccinations show positive signs of improvement. French/UK fishing disputes continue as French fishermen demonstrate in the Channel Islands and both countries dispatch navy ships. All eyes will be on US NFP for intraday direction. Support holds 1.2000 and resistance at 1.2115.

EURGBP dips as GBP strengthens on strong conservative bi-election victories. 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 edges back above 1.39 on strong conservative election gains. The UK PM’s conservative party sweeps the bi-elections, gains an extra parliamentary seat and tightens his grip on the conservative party. Scottish & Welsh elections results will be announced today, while the London Mayor results will be announced on Saturday. UK construction posted better than expect numbers, matching a 6 ½ year record set in March as new orders grow as lockdown restrictions lift. The BOE Governor comments yesterday insisted recent changes was not tapering which initially capped GBP strengthening. Intraday it’s all NFP for direction. Support at 1.3850, while resistance sits at 1.3950.