Forex news for New York trade on May 7, 2021:
- US April non-farm payrolls +266K vs +1000K expected
- Canada April net change in employment -207.1K versus -150K estimate
- BOE's Broadbent: Bias towards easing at BOE is now less pronounced
- US consumer credit for March $25.841 billion billion versus $20 billion estimate
- Baker Hughes oil rig count for the current week shows oil rigs up to 344 from 342
- Treas Sec. Yellen: April jobs report underscores the long climb back to US
- Biden: The jobs report shows the economy is not overheating
- Iran nuclear talks will continue this weekend and they're a big risk for oil
- US wholesale inventories for March (F) 1.3% versus 1.4% preliminary
- Fed's Barkin: It seems employers paying $15/h have less trouble hiring
- Fed's Kashkari: Payrolls report validates the Fed's outcome-based approach
- Gold up $16 to $1832
- US 10-year yields up 1 bps to 1.58%
- WTI crude flat at $64.67
- S&P 500 hits record 4328
- EUR and AUD lead, USD lags
The non-farm payrolls report certainly made for an interesting trading day and the repercussions of the shockingly-soft report will continue to reverberate.
This time, it turns out the first reaction (selling the US dollar) was the right one. It dropped 50-80 pips across the board on the headline but then staged a solid recovery, in part because of questions about seasonal adjustments.
Ultimately though, the market appeared to conclude that the Fed's vote is the only one that counts and this will keep them on the sidelines longer. The dollar then renewed its drop with a vengeance
The bond market tells an interesting story. The US 10-year fell a full 10 bps to 1.46% but then came all the way back to 1.57% to finish higher on the day. Meanwhile, the belly held a bid. One way to look at that is the market is sensing the Fed will stay easy but that ultimately it will be too easy and stoke inflation.
Of course, all of that is way too much analysis for one jobs report, that's a huge outlier compared to months of sparking data.
The euro took full advantage of the US dollar move, tacking on 100 pips to 1.2181, which is the highest since February.
Cable, meanwhile, remains right at the top of the March/April/May range and will be an interesting spot to watch next week.
The Canadian dollar was really torn on the data. It was softer in Canada but that was due to a lockdown that will end this month (at least I sure hope it does). Before that, Canadian jobs were strong and few doubt they'll bounce back afterwards. Still, loonie traders were weighing that against a potential slowdown in the US and the raging commodity bull market. Ultimately, CAD lost ground against the field but was flat against the dollar.
Have a great weekend.