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  • Despite a Goldilocks nonfarm payrolls report from Friday, the greenback and U.S. yields were pressured once a poor ISM services data coupled up soft wages growth within the Non-farm payrolls report that failed to underpin Powell’s presser rhetoric.  

The DXY slipped 0.70% while the US 10yr treasury yield fell from 2.56% to 2.51%. The 2yr yield slid from 2.35% to 2.31% and the prospect of a Fed rate cut by December, implied by Fed fund futures, stood still at 65%.

US jobs growth blew past estimates in April rising 263k. However, average hourly earnings showed no signs of improvement, rising only 3.2% over the year, a little below expectations. Meanwhile, the US services ISM index dropped to 55.5 in April from 56.1, a near two-year low.

  • Breaking: Trump’s threat to lift tariffs on Chinese imports sends risk assets into reverse, Yen is 0.34% higher vs dollar

At the start of the week, markets have been troubled by Trump’s weekend tweets that are threatening to impose tariffs on China. This comes just days before Chinese delegates are expected to meet Trump administration officials to continue in trade negotiations. This has sparked a deterioration in risk appetite this morning, weighing heavily on the Aussie and risk assets and thin liquidity, with London and Japan out, means China’s reaction and/or retaliation could make for one-way bearish traffic bar those that have already filled their gaps, such as GBP and the euro.  For instance, while the AUD/JPY has, as predicted, (AUD/JPY Technical Analysis: The case for  50% mean reversion back to the daily support line circa 77.50), made its way back to 50% of the slide, as the FX space’s risk barometer, bears should be inclined to stay on top of the market while uncertainty prevails.   Eyes should be on AUD/USD and USD/JPY as well while  the price tests the 23.6% Fibo, extending Friday’s decline from  111.50 to 111.08.

Friday’s G10 currency movers:  Analysts at Westpac Banking Group offered a summary of the moves in majors from Friday.


  • EUR/USD bounced off 1.1140 after US payrolls to 1.1205, but opens lower at 1.1170/80.  
  • Sterling outperformed, perhaps with some hope that poor local government election results for both Conservatives and Labour would encourage them to reach a compromise on Brexit. GBP/USD is up 1% versus early Friday, at 1.3160.  
  • AUD/USD rose from 0.6990 to 0.7025 in NY trade, but opened Monday trade around 0.6965, presumably in response to the tariff threat.  
  • NZD reached 0.6653 in NY, then started the week around 0.6600.  
  • AUD/NZD slipped about 20 pips to 1.0550.

Key notes from U.S. session:

  • Goldilocks jobs report sees US stocks rise, NASDAQ highest on record, DJIA firms

  • Non-Farm Payrolls exceed expectations

Key events ahead:

Eurozone  final April readings on PMIs are on tap – London/Japan closed, U.S. calendar is quiet.