7 May 2015
Aussie shrugs off mixed Jobs data, All eyes on UK Elections
FXStreet (Mumbai) - The entire Antipodeans complex was heavily bid in Asia, with the Australian dollar surging despite mixed Australian employment data while the Kiwi moved in tandem with its Oz counterpart, extending its recovery mode from yesterday’s slump. USD/JPY trades in a flat lining circa 119.50, recouping US ADP-led losses.
Key headlines in Asia
China: Downside risks are mounting - Fitch
Australian employment conditions soften in April
Japan Markit Services PMI rose from previous 48.4 to 51.3 in April
Dominating themes in Asia - centered on JPY, AUD, NZD
A low key affair in Asia, with only the key Australian labor market data to report. While the Asian markets traded on a softer note with Nikkei deep in red following negative close on Wall Street after Fed’s Yellen warned that stock valuations were high. While, the US dollar index recovers from fresh three-month lows reached on Wednesday after ADP employment update missed forecasts.
The Aussie was the top performer as markets shrugged off weak Aus employment data and resumed its post RBA-rally. The unemployment rate crept up to 6.2% in April from 6.1% a month earlier. A net 2,900 jobs were lost in the economy last month, coming in lower than forecasts of 4,000 jobs added.
NZD/USD edged higher tracking the AUD as also on a profit-taking spree after the recent weakness backed by disappointing NZ jobs data. Meanwhile USD/JPY trades muted, albeit supported at 119 mark, as the pair consolidates previous losses ahead of US weekly jobless claims data later today and Friday’s NFP figures.
Heading into Europe - centered on EUR, GBP
All eyes are set on the UK Parliamentary elections as it takes center stage today. While German factory orders and other 2-tier economic data from the Euro zone are expected to fill in a fairly light EUR calendar. Greece headline will also remain in focus today.
Germany will report the state of its March factory orders at 6GMT, with 1.5% growth expected in the third month of the year, and 1.9% growth annually. The country reported negative 0.9% growth in orders in February, month-on-month, while it saw negative 1.3% growth on an annual basis.
Among others, industrial production in France is seen as flat (0.0%) in March following stagnation reported in February, m/m, while it is expected to add 1.2% y/y, compared to the 0.6% recorded in Feb.
UK Elections – Key Event
Voters in the UK and Northern Ireland gear up for one of the tightest polls for more than a century. Markets are expected to remain on the edge all though the day closely watching UK elections with the latest opinion poll suggesting there could be a hung Parliament in which no single party has a majority of the 650 seats and there is no clear winner. Thus, uncertainty surrounding UK elections is expected to keep GBP/USD pressured.
With reference to forecasts on the UK election, Nomura believes, "Although it may take many days for the exact terms of the new government to be known, the seat arithmetic early on 8 May could reveal who will be leading it."
"Our baseline forecast continues to be 290 seats (±30) for the Conservatives, which would be enough to command the confidence of the house with 28 LibDems (±6) and 8-9 DUP MPs. The exit poll at 10pm may provide valuable information again, so we will be watching this as a first guide before the results start rolling in, with the outcome likely to be clear at about 4am on Friday"
GBP/USD Technicals
Valeria Bednarik, chief analyst at FXStreet notes, "Britain elections are in the eye on the storm as polls show the two major parties are neck-and-neck with only a couple of points of difference, which may lead to a hung Parliament."
"Anyway, the broad dollar weakness has pushed the pair to a fresh weekly high, and the 1 hour chart shows that a mild positive tone prevails, with the price above a bullish 20 SMA and the technical indicators aiming north in positive territory. In the 4 hours chart the price established above its 20 SMA whilst the technical indicators remain in positive territory, albeit showing no upward strength, anticipating some consolidation ahead the elections' result."
Key headlines in Asia
China: Downside risks are mounting - Fitch
Australian employment conditions soften in April
Japan Markit Services PMI rose from previous 48.4 to 51.3 in April
Dominating themes in Asia - centered on JPY, AUD, NZD
A low key affair in Asia, with only the key Australian labor market data to report. While the Asian markets traded on a softer note with Nikkei deep in red following negative close on Wall Street after Fed’s Yellen warned that stock valuations were high. While, the US dollar index recovers from fresh three-month lows reached on Wednesday after ADP employment update missed forecasts.
The Aussie was the top performer as markets shrugged off weak Aus employment data and resumed its post RBA-rally. The unemployment rate crept up to 6.2% in April from 6.1% a month earlier. A net 2,900 jobs were lost in the economy last month, coming in lower than forecasts of 4,000 jobs added.
NZD/USD edged higher tracking the AUD as also on a profit-taking spree after the recent weakness backed by disappointing NZ jobs data. Meanwhile USD/JPY trades muted, albeit supported at 119 mark, as the pair consolidates previous losses ahead of US weekly jobless claims data later today and Friday’s NFP figures.
Heading into Europe - centered on EUR, GBP
All eyes are set on the UK Parliamentary elections as it takes center stage today. While German factory orders and other 2-tier economic data from the Euro zone are expected to fill in a fairly light EUR calendar. Greece headline will also remain in focus today.
Germany will report the state of its March factory orders at 6GMT, with 1.5% growth expected in the third month of the year, and 1.9% growth annually. The country reported negative 0.9% growth in orders in February, month-on-month, while it saw negative 1.3% growth on an annual basis.
Among others, industrial production in France is seen as flat (0.0%) in March following stagnation reported in February, m/m, while it is expected to add 1.2% y/y, compared to the 0.6% recorded in Feb.
UK Elections – Key Event
Voters in the UK and Northern Ireland gear up for one of the tightest polls for more than a century. Markets are expected to remain on the edge all though the day closely watching UK elections with the latest opinion poll suggesting there could be a hung Parliament in which no single party has a majority of the 650 seats and there is no clear winner. Thus, uncertainty surrounding UK elections is expected to keep GBP/USD pressured.
With reference to forecasts on the UK election, Nomura believes, "Although it may take many days for the exact terms of the new government to be known, the seat arithmetic early on 8 May could reveal who will be leading it."
"Our baseline forecast continues to be 290 seats (±30) for the Conservatives, which would be enough to command the confidence of the house with 28 LibDems (±6) and 8-9 DUP MPs. The exit poll at 10pm may provide valuable information again, so we will be watching this as a first guide before the results start rolling in, with the outcome likely to be clear at about 4am on Friday"
GBP/USD Technicals
Valeria Bednarik, chief analyst at FXStreet notes, "Britain elections are in the eye on the storm as polls show the two major parties are neck-and-neck with only a couple of points of difference, which may lead to a hung Parliament."
"Anyway, the broad dollar weakness has pushed the pair to a fresh weekly high, and the 1 hour chart shows that a mild positive tone prevails, with the price above a bullish 20 SMA and the technical indicators aiming north in positive territory. In the 4 hours chart the price established above its 20 SMA whilst the technical indicators remain in positive territory, albeit showing no upward strength, anticipating some consolidation ahead the elections' result."