8 May 2015
Pound bulls cheer up Tory gains, more joy to come on US NFP?
FXStreet (Bali) - The British Pound had a stellar performance in Asia, as David Cameron's Conservative party looks set to keep his post as British Primer Minister, while the Australian Dollar did not bode too well the RBA SoMP report.
The Sterling surged more than 2 cents against the US Dollar as David Cameron looks poised to keep his job as UK Prime Minister, with the possibility of an overall majority floating in the air.
It all started with a shocking exit poll at the NY close that showed Cameron's Conservatives taking an enormous early lead against Labour, and in total contradiction to all possible expectations, given the neck-to-neck race well documented by weeks and weeks of polls.
The UK exit polls saw conservative projected to win 316 seats vs Labour 239, with SNP 58, LibDems 10, Plaid15 4, UKIP 2, Greens 2 and Others 19. As the British night progressed, a series of key defeats by Labour-held strongholds only re-affirmed the GBP bulls' conviction that Cameron will rmain in power for another 4 years.
With regards to the Australian Dollar, market were initially struggling to interpret RBA's SOMP, but after a few swings up and down, the final verdict was that a the message of removing the chances of further easing was not strong enough, thus the eventual reaction was a bearish one, taking the pair down to 0.7865 support before bouncing off towards 0.7880/85.
The Japanese Yen traded on a soft note as well, with USD/JPY rising towards 120.00 offers ahead of the US Non-Farm Payrolls.
Headlines in Asia
BOJ minutes: QQE to continue until inflation target reached
Cameron closer to winning overall majority in parliament
RBA cuts growth, inflation but silent on rates
China trade figures soft again in April
US NFP preview - RBS, Nomura
Brian Daingerfield, FX Trading Strategist at RBS, notes: "Our economists anticipate that US employers added 235K jobs in April after a just 126K increase in payrolls in March. Along with the rebound in headline payrolls, we expect another solid pickup in average hourly earnings, boosting the y/y average hourly earnings growth rate from 2.1% to 2.3% which, while still below levels the Fed considers normal, would be the strongest since 2009."
"We expect an edge down in the unemployment rate from 5.5% to a new recovery low of 5.4%. With the bar for outperformance likely lower, we expect the USD will rally on the back of a solid, but not blockbuster, employment report. Please see the USD Playbook for more on our views heading into the NFP report", Brian added.
Nomura's Economists wrote that 'April's calendar bias' has led them to revise their forecast for NFP growth up by 60k to 270k. Nomura notes: "Recent data suggest that the pace of economic activity has accelerated somewhat since the end of the first quarter. Our models suggest that this modest pickup is broadly consistent with growth in private payrolls of about 200,000 per month."
The Sterling surged more than 2 cents against the US Dollar as David Cameron looks poised to keep his job as UK Prime Minister, with the possibility of an overall majority floating in the air.
It all started with a shocking exit poll at the NY close that showed Cameron's Conservatives taking an enormous early lead against Labour, and in total contradiction to all possible expectations, given the neck-to-neck race well documented by weeks and weeks of polls.
The UK exit polls saw conservative projected to win 316 seats vs Labour 239, with SNP 58, LibDems 10, Plaid15 4, UKIP 2, Greens 2 and Others 19. As the British night progressed, a series of key defeats by Labour-held strongholds only re-affirmed the GBP bulls' conviction that Cameron will rmain in power for another 4 years.
With regards to the Australian Dollar, market were initially struggling to interpret RBA's SOMP, but after a few swings up and down, the final verdict was that a the message of removing the chances of further easing was not strong enough, thus the eventual reaction was a bearish one, taking the pair down to 0.7865 support before bouncing off towards 0.7880/85.
The Japanese Yen traded on a soft note as well, with USD/JPY rising towards 120.00 offers ahead of the US Non-Farm Payrolls.
Headlines in Asia
BOJ minutes: QQE to continue until inflation target reached
Cameron closer to winning overall majority in parliament
RBA cuts growth, inflation but silent on rates
China trade figures soft again in April
US NFP preview - RBS, Nomura
Brian Daingerfield, FX Trading Strategist at RBS, notes: "Our economists anticipate that US employers added 235K jobs in April after a just 126K increase in payrolls in March. Along with the rebound in headline payrolls, we expect another solid pickup in average hourly earnings, boosting the y/y average hourly earnings growth rate from 2.1% to 2.3% which, while still below levels the Fed considers normal, would be the strongest since 2009."
"We expect an edge down in the unemployment rate from 5.5% to a new recovery low of 5.4%. With the bar for outperformance likely lower, we expect the USD will rally on the back of a solid, but not blockbuster, employment report. Please see the USD Playbook for more on our views heading into the NFP report", Brian added.
Nomura's Economists wrote that 'April's calendar bias' has led them to revise their forecast for NFP growth up by 60k to 270k. Nomura notes: "Recent data suggest that the pace of economic activity has accelerated somewhat since the end of the first quarter. Our models suggest that this modest pickup is broadly consistent with growth in private payrolls of about 200,000 per month."