Daily FX Update, 8 May 2015 OVERNIGHT MARKET UPDATE:

·         US initial jobless claims rose marginally to 265k from 262k, but the four-week moving average declined slightly to 280k from 284k – a new 15-year low. In combination with a range of other labour market indicators, these data suggest that the underlying conditions in the US labour market remain robust.  

·         It was a wild ride for European fixed income markets overnight. At one point, German 10-year yields traded 17 bps higher on little or no economic news. However, as quickly as yields had risen they reversed this move, with the market closing broadly unchanged in the end. It was a similar story for other core sovereign bond markets. However, periphery yields ended lower, with the 10-year yield in Italy, Spain and Portugal down 14 bps, 15 bps and 14 bps respectively.  

·         Preliminary results from the UK general election will begin to trickle in later today, with the result remaining too close to call.   

·         In the currency market, a better initial jobless claims print ahead of tonight’s payrolls report saw the USD pick itself off two month lows on expectations of a positive payrolls print tonight.  

·         Despite stronger than expected jobless claims data, US Treasuries rallied overnight, snapping a four-day selloff. The 10-year yield ended down 6 bps to 2.18%.     

·         In US equities, tech stocks supported equities more generally, with the S&P 500, DJIA and NASDAQ all up between 0.4% and 0.5%.                

·         Oil was weaker. Both WTI and Brent suffered from profit taking after another strong week for markets. A combination of a stronger USD and concerns over demand saw investors liquidate long positions. This was also compounded by comments from various US producers who indicated they would ramp up drilling activity if prices continued to rise.  

Gold prices ended lower for a second straight session, on some better-than-expected initial jobless claims data in the US, amid speculation that an upbeat US jobs report could put the Federal Reserve back on track to raise interest rates this summer.