Friday, May 3, 2024

Capital Markets: "Dollar is Softer Ahead of the Employment Report"

From Marc Chandler at Bannockburn Global Forex, May 3:

Overview: The greenback is trading with a softer bias ahead of the US jobs report. Solid, even if not spectacular job growth, is expected. However, recent survey data warns of the downside risks. Moreover, counter-intuitively, the dollar has not often rallied this year into the employment data, but frequently has in response. The dollar is softer against the G10 currencies. The Norwegian krone is the strongest, up about 0.6% after the central bank delivered a hawkish hold, by warning that rates may need to stay restrictive longer than it has previously anticipated. Also, of note, the greenback made a new low for the week against the yen near JPY152.75, which is also a new three-week low. Emerging market currencies, but the Czech koruna and South African rand are also firm against the dollar today, and the offshore yuan firmed to its best level since mid-March.

Asia Pacific equities are mixed, but the highlight is the ninth consecutive rally in the Hang Seng, and over the run it is up almost 14%. The mainland shares that trade in HK have risen in eight of the past nine sessions and has also risen nearly 14%. Europe's Stoxx 600 is rising for the first time since Monday, and it needs some follow-through gains to negate this week's decline after rallying 1.75% last week. Encouraged by some corporate earnings, US index futures are extended this week's gains, but the US jobs report is key. Benchmark 10-year yields are slightly softer in Europe and are little changed on the week. The 10-year US Treasury yield is near 4.57%, off about four basis points this week. Gold is consolidating quietly, straddling $2300. It looks to be the first back-to-back loss since February. June WTI is consolidating after falling about 6% in the past four sessions. It reached nearly $78.40 yesterday, its lowest level since March 13. It has fallen by about 5.8% so far this week, which is the largest decline in three months....

.... America
It is about the US jobs report today....