The Markets Post NFP

Published 04/10/2017, 04:33 AM
Updated 02/02/2022, 05:40 AM

The main initial moves after the US strikes in Syria have been largely erased, except for oil as it appears the strike was a pinpoint retaliation for that chemical attack earlier in the week, and not a prolonged action or escalation.

The NFP saw a very mixed picture as the base number was surprisingly weak and below expectation at 98K versus an expected 180K. The number is especially surprising since during the week the data was strong and indicated also a strong NFP, but this obviously wasn’t the case. The good thing is that wages grew as expected and that the unemployment level dropped to only 4.5%.

Currencies

EUR/USD – dropped to the lowest level in a month as this week the most important data will be tomorrow and will be from Germany. The EUR is also weakening due to concerns over the nearing elections in France which sees the polls tightening and also the terror attack in Sweden.

USD/JPY – once again tested the support around the 110 level and once again it was able to find support there. Right after the NFP it appeared that the level was going to be broken, but as the average NFP is still solid and also unemployment rate dropped it was able to rebound and actually climb. The news that the US is sending a carrier group towards the Korean Peninsula didn’t cause a flow to safe havens.

GBP/USD – moved away from the resistance around the 1.249 level as the USD gained further strength on Friday and was also helped by weak data out of the UK. This week we will have more data out of the UK.

AUD/USD – appears to have broken below the support as the weaker Chinese data on Wednesday caused the AUD to weaken. We have seen repeated attempts to break though the resistance which failed and since the last attempt we have seen a steady decline. This week we will have the highly volatile employment data out of Australia to look forward to as well as data out of China which has a high impact on the AUD.

USD/CAD – this week will see the interest rate decision where no change is expected. Friday’s data out of Canada was solid, but was not able to cause for a major movement, as we see the CAD weaken this morning on the backdrop of a stronger USD, even though oil prices continued to climb.

USD/SEK – the terror attack in Stockholm on Friday caused the SEK to weaken further as it has now reached the highest level in 3 months.

Bitcoin – appears to have found the way up again and could try to get close and break its all-time high again.

Litecoin – after a spectacular rise over the last 2 weeks, we see a sharp correction. We will see if there will be some support found around one of the Fibonacci levels.

Indices

Dollar Index – extended its strong start of the month as it has climbed each day since the end of March and has reached the highest level in 3 weeks, even though the NFP initially brought it down.

S&P 500 – was able to retrace nearly all its losses after it dropped when news broke that the US launched strikes again Syria. A lot of attention will go out over the next few weeks to how the FED plans to lower its balance sheet of $4.5 trillion as it will try to do so in a manner that will not shake up the markets.

Commodities

Gold – while it showed sharp gains on Friday morning and also after the NFP, it closed with only marginal gains. It looks like the interest rate in the US will continue to go up even though the NFP was surprisingly weak. If the next NFP will also be meager that outlook could change, but it appears that unwinding the balance sheet will not comet the expanse of rising the interest rate, at least not a lot.

Oil – continued its upwards trend as Russia has indicated that it is considering extended the production cut if OPEC will do the same. The tensions which increased in Syria and also Korea have also added support for oil to move further up, offsetting yet another increase of the number of active rigs. The number has increased for 12 straight weeks.

Stocks

Barclays (LON:BARC) – announced that its CEO is being investigated as he tried to identify a whistleblower.

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