Its all about the jobs numbers in the US & Canada | MTFX
USD: US Jobs report to set the tone for June
Spot
DXY90.30
Week ahead bias
Mildly Bearish
Weekly range
89.50 – 90.50
1 month target
89.00
The soft jobs report for April with a print of just 266K set the tone for the month of May. This allowed markets to dismiss any suggestion of Fed tapering and instead adopt the view that the Fed would not be hurried into making a decision. This week’s May release is also expected to set the tone for June. Consensus suggests an increase of approximately 650K as labour fails to keep pace with demand. These lower jobs numbers are likely to linger for the remainder of the summer which in turn will take the edge off any Fed tapering debate.
On the data front, we see the release of the Fed beige book ahead of the June 16th meeting. A host of Fed speakers are also scheduled this week with Chairman Powell speaking on Friday. Other data points this week include the US May ISM readings which are expected to stay strong. All in all, this week’s Jobs numbers are likely to drive direction in the short term.
CAD: This coming week may add additional support for the loonie
Spot
USD/CAD1.2117
Week ahead bias
Mildly Bearish
Weekly range
1.2000 – 1.2150
1 month target
1.2000
The loonie was the only G7 currency unable to take advantage of a weakening USD over the last couple of days. This comes as the CAD has been on an extended appreciation after the BoC began tapering last month.
This week is exceptionally busy on the data front in Canada. March GDP numbers will provide some insight into the state of the economy pre-lockdown as stricter containment measures were instituted in April. Job numbers are also expected on Friday for May. After the awful (-270K) print caused by the lockdown for April, May should see a strong employment picture as most provinces have started loosening restrictions. For now look for the CAD to remain rangebound with the currency targeting support at 1.2000 against the USD.
EUR: If the ECB is going begin tapering, they have until Thursday to prepare the market
Spot
EUR/USD1.2144
Week ahead bias
Mildly Bullish
Weekly range
1.1250 – 1.2310
1 month target
1.2300
The ECB dovish stance dominated the European markets last week, suggesting that the Bank will not taper its EUR 80/bn per month asset purchase program when it meets on June 10th. If the ECB is to prepare the markets for a shift in strategy, they have until Thursday of this week to do it prior to a one-week blackout.
Data-wise, Tuesday will see the May flash CPI as well as German unemployment numbers which are likely to print on the strong side. The markets will be looking to the ECB for tapering rhetoric which will subsequently drive direction for the euro.
GBP: No real worry that the BoE to begin tapering anytime soon
Spot
GBP/USD1.4155
Week ahead bias
Neutral
Weekly range
1.4010 – 1.4380
1 month target
1.4400
The GBP reacted quite aggressively to the comments by the BoE suggesting a possible rate hike in 2022. That said, most don’t expect any other explicit comments from the BoE and hence may not provide an additional boost of support for the GBP in the short term. News of a full reopening of the UK economy in June may not be achievable will likely hold back the GBP in the short term. However, market participants continue to suggest that the GBP is heading higher as data is expected to show a strong economic boom over the coming months.
This is a very quiet week for the UK on the data front. May’s Nationwide House prices (Tuesday) and April mortgage approvals (Wednesday) are likely to have limited impact on the GBP.
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