From Marc to Market:
Overview: Ahead of a report that is expected to show that employment jumped by around a million in the US last month, the dollar remains lower on the week against all the major currencies and all but a handful of emerging market currencies. The US 10-year yield remains below 1.60%, and alongside British and Australian benchmark rates, has eased this week. In the Asia Pacific region, most equity markets advanced. Still, despite a stronger than expected composite Caixin PMI and a larger than expected trade surplus, Chinese stocks bucked the regional trend and fell and secured a holiday-shortened weekly decline. European equities are slightly firmer, and the Dow Jones Stoxx 600, like the MSCI Asia Pacific Index, is set to snap a two-week decline. US futures have edged up after the Dow set new record highs yesterday as the Fed's financial stability report warned over the vulnerability of investors to stretched valuations. Gold jumped 1.6% yesterday, matching its best gain in nearly two months and overcoming the $1800 level for the first time since late February. The next immediate target is near $1820, the halfway mark of this year's range, and above there, the $1850-$1855 beckons, where the 200-day moving average and the (61.8%) retracement of this year's decline is found. Oil is slipping lower for the third consecutive session, which pares the strong gains seen at the start of the week. Around $64.60, June WTI is still up about 1.5% for the week.
Asia Pacific
China may be confronting a united front of criticism and pressures, but its economy is surprising on the upside. Earlier today, helped by a stronger than expected Caixin service PMI, the composite reading was lifted to 54.7 from 53.1 in March. Economists had expected a small decline. Also, the April trade surplus jumped to $42.85 bln, 1.5x greater than the median Bloomberg forecast. Exports jumped by nearly a third, while imports surged by more than 40%. Imports were flattered by a surge in aircraft imports last month. Higher priced commodities and increased volumes were also evident in some commodities, like iron ore. Despite the wider trade surplus, PBOC reserved rose by about $28 bln to nearly $3.2 trillion last month. It was the first month this year that Chinese reserves have risen and are still a little lower than at the end of last year. Separately, note Beijing is hosting a UN Security Council event today at which a couple of Chinese officials and the US Secretary of State will speak. Expect a rhetorical clash....
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