London Session

EUR/USD has been reluctant to extend yesterday's rally. Having made significant progress since the end of last month, it seems that the risk rally is taking a breather ahead of this afternoon's non-farm payrolls release.
EUR/USD has failed to hold above the 1.3420 level. USD/JPY while still drifting higher has been unable to top 99.50, EUR/GBP has been pivoting around 0.8915 and AUD/USD is trading sideways unable to push beyond yesterday's 0.76 high.

A significant amount of attention is still being given to the results of the US Banks stress tests. On the publication of the press release yesterday it seemed that many in the market were relieved by the fact that no negative shocks were provided. Today, however, the market is focusing on how the banks will go about raising the additional $75 bln in capital in present market conditions. Given that the BoA has the most to raise (USD34 bln), it looks set to remain in the limelight. It has until the first week in June to sell its plans on capital raising to the US government and another 6 months to put them into action.

Today's offering of better than expected economic data was provided by Germany.
March trade data brought unexpectedly bounces in both imports and exports (+0.8% m/m, +0.7% m/m resp). The import data suggests unexpected resilience in domestic demand. In addition, Germany is the largest trading partner of many other European countries, so the increase in activity is encouraging for the region as a whole. German Mar industrial production at flat m/m was also better than expected.

There is no obvious correlation between the US ADP jobs data or initial claims.
However, with both of these releases being better than expected this week the market may have altered its expectation with respect to today's NFP release.
Market medians formed last week stand around -600K, suggesting that it may take a number comfortably below this to take the risk rally to the next phase. Canadian jobs data will start the US session. Apr employment is expected to fall by 50K.

Upcoming Economic Data Releases (US Session). Prior, Expected