Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Greenback weaker on intervention aftershocks
The US dollar was weaker overnight as the lingering aftershocks of this week’s market intervention from Japanese authorities weighed on the greenback.
The USD/JPY fell 1.2% on Thursday after the Ministry of Finance took action to support the Japanese yen in the previous session for the second time this week.
The broader USD index fell 0.4% ahead of tonight’s critical US jobs report.
The Australian dollar extended a recent run of outperformance with the AUD/USD up 0.6% as it neared three-week highs.
The euro and British pound saw smaller gains.
In Asia, the weaker USD/JPY drove losses, with steep falls in USD/CNH, down 0.4%, as it fell to one-month lows.
The USD/SGD lost 0.5% as it hit three-week lows.
US jobs due
The US non-farm employment report is clearly the major event tonight with market forecasts looking to 243k new jobs – down from last month’s 303k – and the unemployment rate forecast to remain steady at 3.8%.
The US jobs market has been on an incredible run; the series has beaten forecasts in 17 of the last 20 releases. Another higher number could see the USD resume this year’s rally after the greenback eased from highs over the last few sessions.
Also tonight, US ISM services are due after a recent slowdown in some key US data.
ISM services might buck the trend, with forecasts looking for a rise from 51.4 in March to 52.5 in April.
For the first time since June 2020, the employment subcomponent of the flash S&P PMI fell into contractionary territory – perhaps the US labor market is nearing a break lower?
NOK at lows ahead of rate decision
The Norwegian krone has fallen to near all-time lows – yet another traditional commodity currency that’s been unable to gain as commodities rally. The stronger US dollar remains the main problem for the currency.
That said, rate cuts in Norway are still a ways off, and Friday night’s monetary policy meeting should be quite muted.
According to a statement made by Norges Bank during their most recent press conference, the policy rate will probably stay where it is for some time to come (source: Norges Bank). We anticipate that this guidance won’t change.
While the drop in headline inflation in March came as a huge surprise to Norges Bank, core inflation came in broadly as expected. Furthermore, Norges Bank is unlikely to provide any dovish concessions because the currency is still quite weak.
USD lower for second day
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 April – 3 May
All times AEST
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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