The USD eases, oil prices weaken, equity markets are up, and US yields decline on signs of improving Sino/US trade tensions. The USD slips in early trading as investors remain cautious ahead of the US key jobs data, which is expected to reflect a non-farm payroll (NFP) job gain of 130k in April after recording 228k in March. Global equity markets extended their gains in hopes of a détente in the trade war between China and the US. Europe’s Stoxx 600 gained for a 9th day, its longest winning streak in almost a year. “It seems we may have reached peak policy uncertainty,” Said Thozet, of Carmignacin Paris. “There are talks ongoing, and Trump seems to have watered down some of his policies.” Elsewhere, oil continues under pressure, Bitcoin prices are steady, while gold and silver prices rally in early trading. In focus today, US Average Hourly Earnings, US Nonfarm Payrolls, and US unemployment rate will help drive intraday direction in currency markets.
In the news. Eurozone inflation unchanged at 2.2% in April, missing expectations for a move lower. China says it’s evaluating the possibility of trade talks with the US. President Trump plans to unveil the Federal budget proposal on Friday. Apple shares fall as Cook says ‘very difficult’ to predict tariff costs beyond June. France and Poland deepen defence ties in signal to Putin and Trump. EU negotiator says Europe is ready to make Trump a Euro 50 billion trade offer. Canadian automobile parts compliant with USMCA won't be hit with Trump's tariffs. The Conservative caucus will meet Tuesday for the first time since the election loss.
In currency markets. Commodity-related currencies rise in early trading due to the prospect of easing US-China trade tensions. The USD is on the back foot ahead of today's US payroll report, despite the optimism of improving trade discussions. CNY is flat, while Asian currencies rally 0.7% on average against the USD. Trading currencies are rebounding, with MXN & CHF up 0.3%, JPY, NOK, ZAR & PLN gained by 0.45%, and AUD & SEK rallied by 0.75% against the USD.
In commodity markets. Oil prices weakened by 0.8%. Natural Gas prices tumbled by 1.35%. Gold prices rallied by 1.5%. Silver prices gained by 0.65%. Copper & Wheat prices strengthened by 1%, and Soybean prices increased by 0.25%.
CAD strengthened in early trading, retesting 1.3800 as the USD faces renewed selling pressure ahead of today's key US jobs report. Alongside today's US jobs data, we expect investors to remain cautious ahead of next week's anticipated Trump / Carney meeting in the White House. Domestically, the Canadian manufacturing activity contracted in April at the steepest rate in nearly five years as US tariff uncertainty weighed on production and new orders. Intraday, US jobs data will be the primary driver for the loonie today.
EURCAD edges higher as weakening oil prices and ongoing CAD/US trade uncertainty keep the loonie on the back foot.
EUR retests 1.1350 amid rising EU inflation and caution ahead of the US Jobs report. The Eurozone inflation, as measured by the Core Harmonized Index of Consumer Prices, rose to 2.7%, exceeding expectations and surpassing March's 2.4%. Meanwhile, the eurozone unemployment rate remained stable at 6.2% monthly. Today's focus will be on the US NFP. If there is a significant negative surprise, with NDF below 100k (expected at 130k), investors may interpret this as a signal for a Fed rate cut in June, which could add further selling pressure to the USD.
GBPEUR continues under pressure on dovish BoE comments and ongoing uncertainty between the US/UK trade agreement.
GBP underperforms its peers but makes small gains against the weakening USD. The pound retests 1.3300 amid an unwinding of the USD ahead of today's critical US jobs report. The pound continues to underperform against its peers after the Bank of England governor highlighted the risks stemming from ongoing trade tensions, and his urging that policymakers factor these into their future decisions, ahead of the May 8th interest rate decision. Domestically, the UK manufacturing sector struggled and continued to contract in April. Meanwhile, export orders experienced their sharpest decline in nearly five years, pressured by rising costs from US tariffs and increased domestic employer taxes.
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