Sterling soars on news that the Conservative Party is set to win 316 set in the 650 seats parliament based on exit poll. That's even more than the 306 seats it won back in 2010. The Labour Party trailed well behind with 239 seats, which is even a decline from 258 seats it won in back in 2010. . David Cameron's Conservative Party is seen as more market friendly and the result would mean less political instability after the elections. GBP/USD is back pressing near term resistance at 1.5496 and break will likely send it through key resistance level at 1.5551. GBP/JPY also surges through 184.99 resistance level as recent rebound resumes. EUR/GBP tumbles sharply through 0.7314 minor support will indicates near term reversal.
In Australia, RBA lowered both growth in inflation forecast in the quarterly Monetary Policy Statement. Growth in year to December 2015 was projected to be 2.50%, down from prior forecast of 2.25-3.25%. Growth in year to December 2015 is lowered to 2.75-3.75%, down from prior 3.00-4.00%. Headline inflation is projected to be 2.5% in the year to December 2015, comparing to prior forecast of 2.00-3.00%. Inflation is projected to be 1.75-2.75% in year to December 2016, down from prior forecast of 2.00-3.00%. RBA noted that "non-mining investment is forecast to pick up later than earlier envisaged" and "mining investment is expected to fall sharply over the next two years." Also, the central bank said "the board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time."
From China, trade surplus widened to USD 34.1b in April, up from March's 3.1b. Exports dropped -6.4% yoy to USD 176.3b while imports dropped -16.2% yoy to USD 142.2b. It's noted that foreign trade activity continued recent decline as slump in housing and oversupply of raw materials pushed down commodity imports. Meanwhile, slow recovery in Europe and Japan dragged down exports. Some analysts noted that the Chinese authority could roll out export tax rebates and cut interest rate further to help revive trade activities.
Looking ahead, non-farm payroll will be the main focus today. Economists expected 230k growth in NFP in April with unemployment rate drop to 5.4%. The pre-NFP data were mildly negative overall. Employment component of ISM manufacturing dropped to 48.3 . ADP employment missed expectation and dropped to 169k. Nonetheless, the employment component of ISM services rose slightly to 56.7. Four-week moving average of initial jobless claims dropped to 279.5k. Overall, we'd more likely see downside surprise in NFP today.
Canada employment and housing starts will also be released. Earlier in the day, Swiss will release CPI and unemployment. German will release industrial production and trade balance. UK will release trade balance.