Market Roundup
• Dour U.S. employment report casts doubts on Fed rate hike, NFP +38k, UE rate falls to 4.7%, U6 steady (9.7%), participation rate drops from 62.8 to 62.6%.
• US Markit svcs PMI final 51.3 v 51.2 previous, Comp Final PMI 50.9 v 50.8 previous.
• US Apr factory orders on target at 1.9% up vs Mar.
• US May ISM N-Mfg PMI, bus act & employment lower vs Apr.
• Fed’s Brainard: US jobs report sobering, global risks still warrant caution, some evidence strong USD has depressed earnings.
Looking Ahead – Economic Data (GMT)
• 01:00 Australia MI Inflation Gauge May 0.10%-previous
• 23:50 Japan Foreign Reserves May 1262.50b-previous
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
Currency Summaries
EUR/USD is likely to find support at 1.1318 levels and currently trading at 1.1372 levels. The pair has made session high at 1.1373 and hit lows at 1.1286 levels. Euro rose sharply against the greenback as sellers stepped in following the U.S. jobs report which came in far below expectations and cast doubt on whether the Federal Reserve would raise U.S. interest rates soon. Data showed, Nonfarm payrolls increased by only 38,000 jobs last month, the smallest gain since September 2010, the Labor Department said on Friday. Employment gains were also restrained by a month-long strike by Verizon workers, which depressed information sector payrolls by 34,000 jobs. The dollar tumbled against a basket of currencies on Friday and was on track for its largest one-day percentage loss in four months. The euro was last up against the dollar to $1.1372. It hit a high of 1.1373, the highest level since May 17.
GBP/USD is supported in the range of 1.4483 levels and currently trading at 1.4514 levels. It reached session high at 1.4580 and hit low at 1.4498 levels. British pound rallied against the dollar on Friday as the monthly U.S. employment report led investors to bets in favour of the pound, helping the pound almost erase losses incurred earlier this week on worries about Britain's future in the European Union. Sterling jumped 1 percent to $1.4582, up from $1.4432 after the jobs numbers were released. For the week sterling was down just 0.3 percent, having at one point been on track for its worst performance since March. Earlier, sterling had shrugged off better-than-expected UK services data, with the focus firmly on Britain's referendum on the EU. Markit's services activity index rose to 53.5 in May from 52.3 in April. That was stronger than the median forecast of 52.5.
AUD/USD is supported around 0.7300 levels and currently trading at 0.7366 levels. It hit session high at 0.7368 and made session lows at 0.7332 levels. The Australian dollar surged higher against U.S. dollar on Friday after a surprisingly weak jobs report prompted doubts about the U.S. economy and its ability to sustain a near-term interest rate hike. Traders significantly cut bets that the Federal Reserve will raise rates at its meetings in June and July. Such sentiment was reflected in the weakness in the financial sector, which is seen as benefiting in a rising rate environment. The currency pair has risen above 0.7300 levels this week, following six weeks of losses, after data showing the Australian economy grew by a solid 1.1 percent in the first quarter that encouraged investors to scale back expectations for an interest rate cut. The Reserve Bank of Australia (RBA) holds its policy review on June 7 and is widely expected to keep rates at an all-time low of 1.75 percent. Markets, however, are giving an around 50-50 chance of a move by August, rising to 86 percent by December.
USD/CAD is supported at 1.2908 levels and is trading at 1.2938 levels. It has made session high at 1.2973 and lows at 1.2914 levels. The Canadian dollar rose against its U.S. counterpart on Friday as weaker than expected U.S. jobs data weighed on the greenback. the loonie extended its gains against US dollar after the release of disappointing U.S. employment data that could lowered chances for Federal Reserve to raise interest rates this Month. The U.S. economy created the fewest number of jobs in more than five years in May, pointing to labor market weakness that could make it difficult for the Fed to raise interest rates. On the data front, Canada's trade deficit in April narrowed to C$2.94 billion ($2.24 billion) from a record C$3.18 billion in March. The deficit, announced by Statistics Canada on Friday, was the 20th in a row and greater than the C$2.45 billion shortfall forecast by analysts.
Equities Recap
European shares closed mixed on Friday after much weaker U.S. jobs data than expected, while Accor soared on reported plans by a Chinese rival to raise its stake in the hotel group.
UK's benchmark FTSE 100 closed up by 0.34 percent, the pan-European FTSEurofirst 300 ended the day down by 0.92 percent, Germany's Dax ended down by 1.08 percent, France’s CAC finished the day down by 1.02 percent.
Wall Street finished lower on Friday, led down by financial shares, after a surprisingly weak jobs report prompted doubts about the U.S. economy and its ability to sustain a near-term interest rate hike.
Dow Jones closed down by 0.18 percent, S&P 500 ended down by 0.29 percent, Nasdaq finished the day up by 0.60 percent.
Treasuries Recap
U.S. Treasury debt yields tumbled on Friday, as prices rallied after data showed the world's largest economy created the fewest jobs in more than five years in May, quashing expectations that the Federal Reserve would raise interest rates this summer.
U.S. 30-year bonds rose more than a point, yielding 2.519 percent, from 2.583 percent on Thursday. Earlier, 30-year yields slid to 2.510 percent, a four-month trough. U.S. 30-year bond yields posted their largest daily decline in four months.
Two-year notes were up 8/32 in price, with a yield of 0.779 percent, compared with 0.895 percent late on Thursday. U.S. two-year note yields had their biggest one-day drop since March 2009.
U.S. five-year notes gained 20/32, with yields falling to 1.230 percent from 1.357 percent the day before.
Commodities Recap
Oil prices tumbled more than 1 percent on Friday, extending losses after weekly industry data showed U.S. drillers added rigs for only the second time this year.
Brent crude futures ended the session down 40 cents at $49.64 per barrel.
Brent's price remained almost double January lows, notching its eighth weekly gain in nine weeks.
U.S. West Texas Intermediate (WTI) crude futures settled down 55 cents at $48.62. For the week, prices fell 1.1 percent, its first weekly decline in four weeks.
Gold surged more than 2 percent and was on track for its biggest one-day jump in seven weeks on Friday after U.S. payrolls data fell well short of forecasts, boosting expectations that the Federal Reserve will stand pat on interest rates.
Spot gold was up 2.5 percent at $1,240.70 an ounce at 2:19 p.m. EDT (1819 GMT), while U.S. gold futures for August delivery settled up 2.5 percent at $1,242.90 an ounce.
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