FX markets continued to see choppy and
mixed price action over the past week amid holiday-thin liquidity conditions.
The DXY initially fell on weaker than expected US data - widening trade
deficit, ADP before rebounding on better than expected initial jobless claims
data. AUD, on the other hand, rallied despite an RBA cut while NZD faced
renewed weakness following the RBA move as focus now shifts to RBNZ (which has
recently turned dovish-slant). GBP rallied hard on a surprised majority win for
the Conservative, as opposed to a hung parliament outcome (market and opinion
polls-implied expectation). Looking ahead FX markets could potentially take a
breather with key event risks out of the way as data calendar lightens up. But
before that, a
FX markets continued to see choppy and
mixed price action over the past week amid holiday-thin liquidity conditions.
The DXY initially fell on weaker than expected US data - widening trade
deficit, ADP before rebounding on better than expected initial jobless claims
data. AUD, on the other hand, rallied despite an RBA cut while NZD faced
renewed weakness following the RBA move as focus now shifts to RBNZ (which has
recently turned dovish-slant). GBP rallied hard on a surprised majority win for
the Conservative, as opposed to a hung parliament outcome (market and opinion
polls-implied expectation). Looking ahead FX markets could potentially take a
breather with key event risks out of the way as data calendar lightens up. But
before that, all eyes on the US Apr payrolls data tonight (8th May, 830pm SGT),
which could provide fresh cues for the USD. We remain convicted to our USD bull
trajectory over the medium term; remain better buyers on this correction. For
the week, we prefer to be long AUD/NZD; short NZDSGD; favor buying USD/AXJs
selectively.
The US Apr payroll data this evening is of
keen interest, especially against a USD correction environment amid weak string
of US data. Consensus is looking for a +220k print for NFP, following a
negative shocker (+126k in Mar). Our in-house model estimates the NFP to be
+204k. Consensus is also looking for +0.2% m/m (vs. +0.3% prior) in average
hourly earnings. Disappointment will only amplify USD weakness. But a strong
NFP number (+200k to +250k) or upward revision to Mar NFP/wages could help DXY
regain momentum to climb higher. Moving on the Euro-area Finance Ministers meet
on 11 May. Greek development remains fluid and will continue to drive sentiment.
On one hand, Greek officials are optimistic that a deal will be reached while
on the other hand, non-Greek officials said that a Greek deal is not close.
Greece is due to make a EUR767mil repayment to IMF on 12 May. For 13 May, focus
on 1Q GDP data from Euro-area, Germany, France, Italy to confirm a cyclical
recovery in the Euro-area. German, French, Italian Apr CPI will be of interest
for inflation development. For Asia, China is due to release Apr activity data
– retail sales (Cons. +10.4%); Industrial production (Cons. +6%) and FAI (Cons.
+13.5%) and monetary data during the week; and we are expecting the data to be
slightly better than prior on recent policy easing measures. Philippines’ BSP
is also due to meet on 14 May, and we are expecting the central bank to keep
policy rate on hold.
Other data/event that we are
watching includes BoE MPC meeting on 11 May, which we expect no change to
policy rate and asset purchase plan. Also on the same day, Malaysia is due to
release Mar IP and manufacturing sales data. For 12 May, UK Mar IP and
manufacturing production on tap. For 13 May, US Apr retail ll eyes on the US Apr payrolls data tonight (8th May, 830pm SGT),
which could provide fresh cues for the USD. We remain convicted to our USD bull
trajectory over the medium term; remain better buyers on this correction. For
the week, we prefer to be long AUD/NZD; short NZDSGD; favor buying USD/AXJs
selectively.
The US Apr payroll data this evening is of
keen interest, especially against a USD correction environment amid weak string
of US data. Consensus is looking for a +220k print for NFP, following a
negative shocker (+126k in Mar). Our in-house model estimates the NFP to be
+204k. Consensus is also looking for +0.2% m/m (vs. +0.3% prior) in average
hourly earnings. Disappointment will only amplify USD weakness. But a strong
NFP number (+200k to +250k) or upward revision to Mar NFP/wages could help DXY
regain momentum to climb higher. Moving on the Euro-area Finance Ministers meet
on 11 May. Greek development remains fluid and will continue to drive sentiment.
On one hand, Greek officials are optimistic that a deal will be reached while
on the other hand, non-Greek officials said that a Greek deal is not close.
Greece is due to make a EUR767mil repayment to IMF on 12 May. For 13 May, focus
on 1Q GDP data from Euro-area, Germany, France, Italy to confirm a cyclical
recovery in the Euro-area. German, French, Italian Apr CPI will be of interest
for inflation development. For Asia, China is due to release Apr activity data
– retail sales (Cons. +10.4%); Industrial production (Cons. +6%) and FAI (Cons.
+13.5%) and monetary data during the week; and we are expecting the data to be
slightly better than prior on recent policy easing measures. Philippines’ BSP
is also due to meet on 14 May, and we are expecting the central bank to keep
policy rate on hold.
Other data/event that we are
watching includes BoE MPC meeting on 11 May, which we expect no change to
policy rate and asset purchase plan. Also on the same day, Malaysia is due to
release Mar IP and manufacturing sales data. For 12 May, UK Mar IP and
manufacturing production on tap. For 13 May, US Apr retail
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